Karachi: The Karachi Metropolitan Corporation (KMC) is seeking approval from the City Council to introduce a new “entertainment tax” aimed at generating additional municipal revenue from the hospitality and events sector.
Under the proposed plan, the tax would be levied at a rate of 1 percent on the total bill of hotels, restaurants, guest houses, lodges, marriage halls, marquees, wedding lawns, Airbnb properties and banquet facilities. Officials estimate that the measure could generate around PKR 1 billion annually.
According to a public notice issued by KMC Municipal Commissioner Abrar Jaffar, the proposal will be presented for consideration in the upcoming municipal budget for the next financial year. The notice also invites public feedback, with a hearing scheduled for June 10 at the KMC headquarters to review objections and suggestions.
KMC’s tourism and municipal administration departments said the proposed tax is intended to strengthen the corporation’s financial position and improve public service delivery. The plan includes introducing a new category titled “Entertainment Tax – City Tourism and Hospitality” along with supporting bylaws under the existing tax framework.
Officials noted that under the Sindh Local Government Act, 2013, the corporation is empowered to impose taxes, fees and charges within its jurisdiction. If approved, the entertainment tax would become part of KMC’s broader revenue generation strategy.
The proposed levy would be the second major tax initiative by KMC in recent years, following the Municipal Utility Charges Tax (MUCT) introduced in July 2024. That levy is collected through K-Electric bills and currently generates approximately PKR 4 billion annually.
Mayor Barrister Murtaza Wahab has previously stated that revenue from MUCT is being used for city development projects as well as to cover pension payments and outstanding dues of municipal employees. However, some opposition representatives and employee groups have raised concerns over the utilization and impact of those funds.
The proposed entertainment tax is now set to undergo public consultation before being placed for final approval by the City Council.
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