Businesses request creation of bankruptcy laws, protection from FBR

Businesspersons in Pakistan have requested the government to shield them from the Federal Board of Revenue’s (FBR) excesses. According to reports, the tax watchdog has allegedly perpetrated instances of harassment against investors, sparking concerns.

Business leaders and investors have outlined how the FBR has “become a symbol of fear”. Moreover, investors have called for the federal government to streamline the board’s policies, claiming that its policies are riddled with inconsistencies. 

According to reports, businesspeople have requested that Islamabad enact laws pertaining to bankruptcy. Analysts believe that reforming bankruptcy laws can boost domestic investment levels, leading to economic growth.

While many developed countries have long-standing bankruptcy laws, Pakistan has reportedly not introduced any such laws. This has caused business owners to refrain from raising funds from investors because if a business fails, the owner can face personal legal trouble.

A bankruptcy law would decriminalise honest business failure, letting genuine entrepreneurs restart without lifelong penalties. Knowing that bankruptcy laws will protect entrepreneurs from personal financial ruin in the event of a business failure could encourage greater business activity in the economy.

The federal government has responded to calls for bankruptcy laws, as Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan declared that a subcommittee has been created to work on drafting bankruptcy laws.

According to reports, Haroon Akhtar chaired the meeting of the PM committee regarding bankruptcy legislation. Authorities present at the meeting highlighted the need to create a business-friendly atmosphere in Pakistan. 

Reports indicate that creating a business-friendly environment aligns with Prime Minister Shehbaz Sharif’s vision.  However, the committee reportedly conceded that the country suffers from the lack of a bankruptcy framework and that steps needed to be taken to create legislation to protect businesses. 

Haroon Akhtar announced the government's aim to regain the confidence of foreign investors. The formulation of bankruptcy laws would send a positive signal to foreign investors regarding the country’s willingness to align Pakistan’s investment climate with the world's.

Data from recent reports have suggested that foreign direct investment (FDI) levels fell by a staggering 91 percent on a year-on-year basis in March 2025. With FDI inflows under jeopardy, many believe that cash-strapped Pakistan must alleviate fears that foreign investors have by introducing business-friendly laws and frameworks.