Pakistan’s foreign business community is making a strong plea to the government for the abolition of the super tax in the upcoming federal budget for fiscal year 2025-26. The call is being spearheaded by the Overseas Investors Chamber of Commerce and Industry (OICCI), a representative body for a significant number of foreign investors operating in the country.
In their formal budget proposals, the OICCI has argued that the super tax, levied under Section 4C of the Income Tax Ordinance, 2001, unfairly targets a limited segment of compliant, high-earning taxpayers, including many foreign investors. According to the OICCI, this group already contributes a disproportionately large share of the national tax revenue. The chamber highlighted that the continued existence of this tax makes Pakistan a less attractive investment destination compared to other countries in the region.
Proposals for Repeal or Phased Withdrawal
The foreign investors’ primary demand is the complete removal of the super tax. However, they have also put forward a suggestion for a gradual phasing out of the tax if an immediate repeal is not deemed feasible by the government. As an interim measure, they propose raising the minimum income threshold for the application of the super tax to Rs300 million, which they believe would offer some relief to smaller yet compliant firms.
The OICCI emphasized that eliminating the super tax would not only provide much-needed relief to existing taxpayers but would also signal the government’s commitment to economic reform and a business-friendly environment. This, they believe, is crucial for attracting new foreign investment and encouraging multinational corporations. The chamber stressed the importance of a stable and predictable fiscal environment for long-term business planning and reinvestment, which they feel is currently hampered by the unpredictable nature of the super tax.
Tax Bar Association Echoes Demand
The demand for the abolition of the super tax has been echoed by the Karachi Tax Bar Association (KTBA). The KTBA has labeled the super tax as a measure initially introduced to address a crisis situation but which has now become a persistent and unwarranted levy. They noted its evolution from Section 4B, initially intended for short-term fiscal needs, into its current form as an unjustified burden.
Both the KTBA and OICCI are confident that repealing the super tax will stimulate business expansion, enhance economic confidence among investors, and ultimately make Pakistan a more appealing country for foreign direct investment. The OICCI’s suggestion of a phased withdrawal over the next three years is presented as a balanced approach that considers both the government’s fiscal requirements and the concerns of investors.
