ISLAMABAD — Overseas investors have urged the government to focus on expanding Pakistan’s tax base rather than increasing pressure on existing taxpayers, as they presented key recommendations for the Federal Budget 2026–27 during a meeting with Minister of State for Finance and Revenue Bilal Azhar Kayani.
The proposals were shared at the Overseas Investors Chamber of Commerce and Industry (OICCI), developed through consultations with member companies. The session was also attended virtually by Dr. Najeeb Memon, Director General of the Tax Policy Office.
The Overseas Investors Chamber of Commerce and Industry stressed the need for a fair, predictable, and investment-friendly tax regime based on documentation and digitisation. It said all sectors—including agriculture, retail, wholesale, real estate, and services—must contribute proportionately to economic activity to ensure equitable taxation.
The chamber proposed reducing the corporate tax rate to 28% in FY2026–27, with a phased reduction to 25% over three years, alongside a gradual elimination of the super tax. It noted that the combined impact of multiple levies, including corporate tax, super tax, and labour-related contributions, pushes the effective tax burden to around 46%.
It also cautioned that high taxation on the banking sector could restrict economic growth by limiting the availability and affordability of credit for businesses across the economy.
To improve talent retention, the chamber recommended abolishing the super tax and the 10% surcharge on high-income salaried individuals, and capping the maximum personal income tax rate at 25%.
Further proposals included rationalising withholding taxes, reducing sales tax on goods from 18% to 17% with a gradual cut to 15%, and reviewing minimum and alternative minimum tax regimes.
During the meeting, foreign investors raised concerns over delayed tax refunds, excessive compliance notices despite strong compliance histories, and weak coordination between federal and provincial tax authorities.
The Overseas Investors Chamber of Commerce and Industry also highlighted the importance of supporting export-oriented industries as a key driver of medium-term growth, suggesting targeted policy support and flexibility within IMF programme constraints where necessary to maintain competitiveness.
The Minister of State welcomed the input from foreign investors and reiterated the government’s focus on stakeholder engagement to broaden the tax base, improve transparency, and support economic growth.
The chamber expressed hope that the proposed measures would help create a more balanced and predictable tax system, encourage investment, strengthen compliance, and support Pakistan’s shift toward sustainable, export-led growth.
The consultation was part of the ongoing budget preparation process led by the Ministry of Finance, which continues engagement with domestic and international business stakeholders.
