AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi: The Overseas Investors Chamber of Commerce and Industry (OICCI) has unveiled a series of tax reform recommendations for the Federal Budget 2025-26, aiming to increase Pakistan’s tax-to-GDP ratio to 14 percent from its current rate of less than 10 percent. The proposed reforms are intended to broaden the tax base, enhance compliance, and foster investment, ultimately improving revenue generation by the Federal Board of Revenue (FBR).
Among the key proposals is a phased reduction of the Corporate Tax Rate to 28 percent for the fiscal year 2025-26, with a plan to decrease it by one percent annually, reaching 25 percent within five years. This strategy seeks to align Pakistan’s corporate tax structure with those of other emerging economies and enhance the country’s competitiveness.
The OICCI highlighted the necessity of incorporating traditionally under-taxed sectors, such as agriculture, real estate, and wholesale/retail trade, into the formal tax system to sustainably expand the tax base.
To simplify compliance and support business growth, the Chamber recommended an immediate reduction in the sales tax rate on goods to 17 percent, followed by a gradual decrease to 15 percent, in line with the regional average. Harmonizing sales tax rates between federal and provincial governments is seen as crucial.
The gradual elimination of the Super Tax over three years was also suggested to create a more predictable fiscal environment conducive to business.
Addressing the issue of the illegal cigarette trade, which results in tax losses exceeding Rs300 billion annually, OICCI called for stringent enforcement measures to curb this revenue leakage.
“Pakistan must act decisively to modernize its tax system,” stated OICCI President Yousaf Hussain. He emphasized that the Chamber’s proposals aim to establish a transparent and equitable taxation framework to stimulate economic growth and attract investment.
In the energy sector, the OICCI advised treating all major petroleum products as taxable supplies at appropriate sales tax rates to ensure a broader tax contribution from the sector.
Further recommendations included facilitating the release of over Rs120 billion in pending tax refunds by the FBR, essential for maintaining investor confidence and attracting foreign direct investment (FDI).
The OICCI also suggested raising the taxable income threshold to Rs1.2 million annually per individual, while maintaining mandatory tax filing for those earning over Rs0.6 million to preserve and expand the taxpayer base.
OICCI Secretary General M. Abdul Aleem concluded, “With the right reforms and policy consistency, Pakistan can significantly expand its revenue base, restore business confidence, and position itself as a more attractive destination for investment.”
The OICCI remains committed to assisting the government in crafting policies that promote economic prosperity and sustainable growth.