Overseas investors seek major tax reforms

OICCI urges broader tax base, lower corporate rates, and end to super tax in budget 2025-26 proposals

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KARACHI:

Overseas investors have urged the government to implement a comprehensive roadmap for tax reforms to broaden the tax base, improve compliance, attract investment, and enhance the Federal Board of Revenue's (FBR) revenue collection.

Speaking to a select group of journalists at the Overseas Investors Chamber of Commerce and Industry (OICCI) office on Tuesday, chamber representatives released their recommendations for the federal budget 2025-26. They emphasised that aligning tax contributions across sectors with their share of GDP could raise the tax-to-GDP ratio to 14%, up from the current level of less than 10%.

Key proposals include reducing the corporate tax rate to 28% for FY2025-26, with a 1% annual reduction to reach 25% over five years — bringing Pakistan in line with other emerging economies. The OICCI also called for reducing the sales tax on goods to 17%, followed by a phased reduction to 15%, and harmonising federal and provincial sales tax rates.

Bringing under-taxed sectors like agriculture, real estate, and wholesale/retail trade into the formal tax net was highlighted as essential to sustainably expanding the base.

The chamber recommended gradually abolishing the super tax within three years and stressed the need for stronger enforcement against illegal cigarette trade, which causes annual losses exceeding Rs300 billion.

OICCI President Yousaf Hussain said, "Our proposals focus on creating a transparent, predictable, and equitable tax system to promote investment, growth, and job creation."

In the energy sector, the OICCI proposed taxing all major petroleum products and urged the FBR to release over Rs120 billion in pending refunds.

They also suggested increasing the individual taxable income threshold to Rs1.2 million while maintaining mandatory tax filing for those earning above Rs600,000.

OICCI Secretary General M Abdul Aleem noted that consistent reforms and policy clarity could boost investor confidence and unlock Pakistan's growth potential.