The federal government has decided to withdraw the income tax exemption previously granted to cinemas, ending a relief policy that had been in place since the 2021–22 fiscal year, according to officials familiar with the matter.
The exemption was originally introduced as part of a broader initiative aimed at reviving Pakistan’s entertainment sector, which had faced significant challenges due to the pandemic and declining footfall. The policy had offered much-needed breathing space to cinema owners and investors, encouraging the development of new cultural spaces across the country.
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Industry representatives had welcomed the tax relief at the time, calling it a step toward rebuilding an industry already under pressure from streaming platforms and high running costs.
With the latest policy shift, cinema revenues will now be taxed under standard income tax rules, raising concerns about the financial sustainability of cinema operators. Many in the sector are already coping with increased electricity bills, shrinking audiences, and limited new film releases.
