New Delhi, March 3: Pakistan’s high taxation regime is choking the formal economy, especially industrial businesses, yet there seems to be no realisation within the Federal Bureau of Revenue (FBR), which keeps extracting juice from the top 1 per cent of the population, according to an article.

The core of the issue is that capital formation is disincentivised, as the effective tax rate, including is over 50 per cent for large manufacturing facilities, according to the article in the Karachi-based Business Recorder.

The main shareholders’ tax is even higher if the business house has a corporate structure, as there is a 15 per cent tax on intercorporate dividends. The net return after all taxes is reduced to one-third of profits, it stated.

Financial capital keeps flying out of the country, and human capital too, as salaried taxes are the highest in the region. It is evident from growing Pakistani investment in the Middle East, especially in the UAE.

The article points out that high-net-worth Pakistani residents are subject to income tax of up to 45 per cent, an additional super tax of up to 10 per cent, and a 1 per cent capital value tax on certain assets held outside Pakistan. As a result, some individuals, including business tycoons, choose to relocate to Dubai or other destinations and become non-residents for tax purposes. For many, the potential tax savings outweigh the higher cost of living abroad. Consequently, a noticeable number of Pakistanis have moved overseas in recent years.

Pakistan’s apex business chambers flagged the issue of the crushing tax burden in their meeting with the IMF team, which is currently on a visit to the country. Last week, the IMF officials were in Karachi and had engagements with both the Overseas Investors Chamber of Commerce and Industry (OICCI) and the Pakistan Business Council (PBC), with both chambers echoing the need to rationalise taxation. It is time for Islamabad to manage the fiscal balance through broadening taxation, curbing losses of state-owned enterprises, especially in energy, and reducing the footprint of the government, the article stated.

Indirect taxes are quite high, too. Adding both direct and indirect taxes increases the incentive to evade taxes. The cost of compliance becomes high. Informal businesses become more competitive and thrive, but they have limitations to scale. The economy does not grow to desired levels, the article lamented.

That largely explains the exodus of MNCs from Pakistan. A few diplomats, especially Europeans, cite unfair taxation as a main complaint. Domestic groups are increasingly venturing into real estate and retail businesses, where part of the income can be hidden in cash and eventually moved out of the country, the article added.

The government needs to reduce rates and expand the base. Provinces must take responsibility for collecting a fair share from land, agriculture, and services sales tax. The federal government must broaden the net beyond manufacturing. Otherwise, manufacturing will keep shrinking. Foreign investors will continue to leave. The exodus of financial and human capital will not stop, the article observed.

Tehran, March 3: A 4.3-magnitude earthquake struck Iran’s Gerash region on Tuesday, amid the escalating conflict in the Islamic Republic.

There were no immediate indications of major damage or injuries.

The quake intensified the existing regional tensions.

Iran’s Islamic Revolutionary Guard Corps (IRGC) released figures on US casualties during the first two days of what it described as retaliatory strikes, with the numbers differing significantly from those announced by the United States, reported local media on Tuesday.

An IRGC spokesperson said up to 650 US soldiers were killed or wounded during the first two days of the retaliation.

The spokesperson said IRGC missiles and drones struck the headquarters of the US Navy’s Fifth Fleet in Bahrain multiple times, and that attacks on US military bases in Bahrain resulted in 160 US casualties.

The US military said that as of 4 p.m. Monday (2100 GMT), six US service members had been killed in military operations against Iran. US media reported that 18 additional troops were seriously wounded. US officials said there have been no fatalities at US military bases in Bahrain.

The IRGC spokesperson also said a US combat support ship was heavily damaged by IRGC missiles, reiterating that four cruise missiles were fired at the USS Abraham Lincoln aircraft carrier, which then “fled” southeast toward the Indian Ocean, reports Xinhua news agency.

Earlier, US Central Command formally denied claims from the IRGC that they had struck the USS Abraham Lincoln with missiles, labelling the Iranian assertions as “disinformation” and a “lie,” adding that the missiles launched by Iran “didn’t even come close.”

The claims by both sides could not be independently verified.

Tehran, March 3: Iran’s Foreign Minister Abbas Araghchi on Tuesday responded sharply to remarks made by US Secretary of State Marco Rubio, asserting that there was never any “Iranian threat” and blaming what he termed “Israel Firsters” for the bloodshed of both Americans and Iranians.

Rubio had said on Monday (local time) that Washington launched strikes on Iran after learning that its ally Israel was preparing to act and amid concerns that Tehran would retaliate against American forces in the region.

“We knew that there was going to be an Israeli action. We knew that that would precipitate an attack against American forces, and we knew that if we didn’t preemptively go after them before they launched those attacks, we would suffer higher casualties,” Rubio told reporters.

Reacting in a post on X, Araghchi wrote, “Mr. Rubio admitted what we all knew: US has entered a war of choice on behalf of Israel. There was never any so-called Iranian ‘threat’.”

He went on to hold Israel responsible for the loss of lives on both sides.

“Shedding of both American and Iranian blood is thus on Israel Firsters. American people deserve better and should take back their country,” the Iranian Foreign Minister added.

Earlier, US Defense Secretary Pete Hegseth said that it was Israel that carried out the strike in Tehran on Saturday that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, along with other senior officials, following intelligence indicating that they were in a meeting at the time.

Rubio, however, maintained that President Donald Trump’s administration believed action against Iran was necessary irrespective of the sequence of events that led to the timing of the operation.

“No matter what, ultimately this operation needed to happen,” Rubio said.

At the same time, Rubio clarified that while the United States would prefer to see the end of the Khamenei establishment, that objective was not the stated aim of the current military operation.