Foreign Investors Raise Alarm Over Growing Tax Refund Backlog
The Overseas Investors Chamber of Commerce and Industry (OICCI) has called on the Federal Board of Revenue (FBR) to immediately release Rs. 103 billion in pending tax refunds. The chamber warned that continued delays are creating severe liquidity pressure for foreign investors operating in Pakistan.
In an official letter to the FBR, OICCI highlighted the rising backlog of unpaid refunds. The chamber said the issue is affecting day-to-day business operations. It also warned that investor confidence is being weakened due to delayed payments.
According to OICCI, the total outstanding refunds have increased significantly in recent months. In November 2025, the pending amount stood at Rs. 96 billion. By February 2026, it had risen to Rs. 103 billion. This reflects an increase of nearly 7 percent in just three months.
The chamber stressed that the growing backlog signals systemic inefficiencies. It urged tax authorities to take immediate corrective steps. Foreign investors depend on predictable cash flows to sustain operations and expansion plans.
Breakdown of Refund Claims Across Major Cities
The Rs. 103 billion total includes both income tax and sales tax refunds. Around Rs. 65 billion relates to income tax refunds. Another Rs. 37 billion is linked to sales tax refunds owed to member companies.
A major share of the pending refunds is concentrated in Karachi. Companies based in Karachi account for approximately Rs. 74 billion of the total claims. Lahore-based firms are owed about Rs. 16 billion. Islamabad-based companies are awaiting around Rs. 13 billion in refunds.
OICCI said that delays are particularly challenging for large multinational firms. These companies require timely reimbursements to manage operational costs. Delayed refunds can disrupt supply chains and investment decisions.
The chamber noted that prolonged settlement timelines are adding financial strain. Companies are forced to rely on internal reserves or external borrowing to bridge the gap. This increases operational costs and reduces competitiveness.
Business leaders argue that efficient tax administration is essential for economic stability. Delayed refunds create uncertainty in financial planning. Investors closely monitor regulatory efficiency when assessing market risk.
Call for Immediate Action and Transparent Mechanism
OICCI reiterated its earlier proposal to allow adjustment of Super Tax liabilities against pending refunds. The chamber believes this step could offer immediate financial relief. It would also reduce the burden on companies waiting for payments.
The organization urged the FBR chairman to intervene directly. It called for a transparent and time-bound refund mechanism. Such a system would prevent further accumulation of unpaid claims.
The chamber emphasized that resolving the issue is critical for improving Pakistan’s investment climate. Timely tax refunds are seen as a key indicator of ease of doing business. Delays can discourage foreign direct investment inflows.
Foreign investors contribute significantly to Pakistan’s economy. They generate employment, technology transfer, and tax revenues. Ensuring smooth tax processes is essential for sustaining investor trust.
OICCI concluded that immediate settlement of Rs. 103 billion in refunds would send a strong positive signal. It would demonstrate the government’s commitment to supporting foreign investors and strengthening economic stability.
