Public procurement in Pakistan plays a critical role in the execution of large and important infrastructure projects. Government entities, while bound by regulatory frameworks, must ensure that the procurement process especially in relation to tax matters, is transparent, equitable, and commercially viable for all bidders.

Unfortunately, tax-related ambiguities and a reactive approach to bidder queries continue to generate disputes that not only burden the parties involved but also lead to time and cost overruns which could otherwise be avoided.

Tax clarity: a non-negotiable element of modern procurement

Tax is not a peripheral issue in procurement – it is central. Whether it is sales tax, income tax withholding, custom duties on imported equipment, or applicability of exemptions under statutory notifications, bidders must be in a position to price their bids accurately and allocate risks fairly. Often, bid documents either:

provide insufficient information about applicable taxes;

shift tax risk entirely to the contractor in vague terms;

or fail to acknowledge ongoing legal or policy disputes on tax interpretation.

In such cases, the bidders are left guessing, and the resulting commercial offer reflects uncertainty. We have seen projects........

© Business Recorder