KMC Proposes 1% Entertainment Tax on Hotels, Marriage Halls to Boost Revenue by Rs1 Billion

KARACHI – The Karachi Metropolitan Corporation (KMC) is preparing to impose a new tax on hotels, restaurants, guest houses, lodges, marriage halls, marquees, marriage lawns, Airbnb properties, and wedding banquet facilities to generate Rs1 billion annually.

If approved by the City Council, the ‘entertainment tax’ will be collected at the rate of one percent of the total bill generated by hotels, marriage halls, and other hospitality venues. Officials said the municipal authority intends to seek approval for the tax in its upcoming budget for the next financial year.

In a public notice, KMC Municipal Commissioner Abrar Jaffar has invited public feedback on the proposal, setting June 10 for a hearing on objections and suggestions at the corporation headquarters.

According to the public notice, the KMC’s tourism department is seeking to strengthen its financial position and improve public services. The corporation plans to amend the existing tax gazette by introducing a new category titled “Entertainment Tax – City Tourism and Hospitality,” along with corresponding bylaws.

The notice stated that under the Sindh Local Government Act 2013, the KMC is authorized to impose taxes, rates, tolls, and fees within its jurisdiction. Officials believe the proposed entertainment tax could become a significant source of income.

“KMC is eyeing the generation of one billion rupees through the entertainment tax,” a KMC spokesman said.

This proposed tax would be the second major move by the KMC to expand its tax net after imposing the MUCT in July 2024, which is collected through K-Electric bills every month, generating around Rs4 billion annually from Karachiites.

Karachi Mayor Barrister Murtaza Wahab has publicly stated on several occasions that MUCT revenues are being used for city development as well as for payment of pensions and dues of municipal employees.

However, opposition representatives have raised concerns. Opposition Leader in the City Council, Saifuddin Advocate, questioned the performance of the city government, arguing that if the administration has failed to make proper use of MUCT, how can it justify generating additional revenue?

KMC Sajjan Union chief Zulfiqar Shah added that hundreds of retired KMC employees are still waiting to receive their pensions and other outstanding dues, claiming that MUCT has brought no benefits to workers.