Tax expert Haider Ali Patel has urged the government to introduce a sunset clause in Section 4C of the Income Tax Ordinance, 2001, to define a clear timeline for ending the super tax in Pakistan.
Speaking at a two-day seminar organized by the Karachi Tax Bar Association, Patel said the super tax was placing an excessive burden on sectors that were already contributing heavily to the national tax system.
Patel, a partner at EY Ford Rhodes, stated that the super tax, imposed at rates ranging from 4 percent to 10 percent, is charged in addition to corporate tax and mainly affects transparent, audited, and listed companies operating in the documented economy.
He noted that the levy was introduced retrospectively through the Finance Act 2022 and significantly impacted the formal corporate sector. While the Federal Constitutional Court upheld the legality of the tax, including its retrospective implementation, Patel argued that legal validity alone should not determine tax policy.
According to Patel, the super tax discourages investment by increasing the burden on companies that create employment opportunities, maintain financial transparency, and regularly pay taxes.
He warned that uncertainty surrounding additional taxation continues to affect investor confidence, with foreign investors remaining cautious and domestic businesses delaying expansion plans.
Patel recommended that the government reassess the super tax based on economic affordability and its impact on Pakistan’s investment climate instead of focusing solely on legal considerations.
Among his key proposals, he suggested reducing the corporate tax rate to 25 percent to improve Pakistan’s competitiveness with regional economies and encourage businesses to operate within the formal sector.
He also proposed eliminating parallel taxation mechanisms by merging Section 113, Alternate Corporate Tax (ACT), and withholding tax-based minimum tax into a single transparent minimum tax regime with lower rates and carry-forward provisions.
In addition, Patel called for targeted tax incentives for listed companies to promote transparency and encourage large private businesses to enter the capital market.
Tax experts participating in the seminar said reforms aimed at simplifying Pakistan’s tax structure and reducing the burden on compliant sectors could strengthen investor confidence and support long-term economic growth.
