AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
KARACHI: The SITE Association of Industry (SAI) has put forward a series of budget proposals designed to stimulate industrial growth and boost Pakistan’s export competitiveness as part of the Federal Budget for 2025-26.
In their recommendations, SAI President Ahmed Azeem Alvi and former president Riaz Uddin, who chairs the taxation committee, urged for a strategic approach to budget-making. They called for separating tax policy formulation from tax administration, aligning with global best practices and drawing inspiration from models in the UK and neighboring countries.
SAI highlighted structural weaknesses in the current taxation system, noting that the income tax base in Pakistan is narrow, with the formal industrial sector shouldering an undue tax burden. The association proposed widening the tax net and capping the maximum income tax rate on business income at 25 percent over the next three years. They also called for the abolition of the Super Tax and relief on dividend taxation.
Expressing concerns over recent amendments to the Income Tax Ordinance, SAI argued that these changes could deter compliance and discourage investment. The association demanded immediate withdrawal of these amendments, citing potential conflicts with the Constitution.
Regarding sales tax reforms, SAI proposed a harmonized General Sales Tax (GST) structure and urged a review of the tax rate to reduce evasion and encourage formalization. The association recommended progressive reductions in the sales tax rate, aiming for a 15 percent rate over the next three years.
SAI also called for maintaining sales tax exemptions on essential goods and the restoration of zero-rating on export facilitation schemes. They suggested introducing a lower sales tax rate of 5 percent for other essential items.
The association emphasized comprehensive reforms in Pakistan Customs, advocating for a revision of outdated legislation and the adoption of a unified valuation system. They also criticized current employee welfare programs, proposing the integration of these schemes into a unified authority with digital interfaces and tripartite representation.
These budget proposals reflect SAI’s stance that economic policy should balance revenue needs with industrial growth, particularly through measures that enhance export potential and attract investment.