Overseas Investors Tell Govt to Expand Tax Base Instead of Burdening Old Taxpayers

During a visit by Minister of State for Finance and Revenue Bilal Azhar Kayani to the Overseas Investors Chamber of Commerce and Industry (OICCI), the chamber presented its key tax recommendations for the Federal Budget 2026–27, developed through extensive consultations with its members. Dr. Najeeb Memon, Director General of the Tax Policy Office (TPO), also joined the session virtually.

OICCI Secretary General M. Abdul Aleem said the recommendations aim to build a fair, predictable, and investment-friendly tax system based on documentation and digitization. He stressed the need to expand the tax net rather than increase the burden on existing taxpayers, adding that all sectors—including agriculture, retail, wholesale, real estate, and services—should contribute in proportion to their economic activity.

The Minister of State welcomed input from foreign investors and emphasized the importance of continued stakeholder engagement to support economic growth, broaden the tax base, and improve transparency.

OICCI proposed reducing the corporate tax rate to 28 percent in FY2026–27, with a phased reduction to 25 percent over three years, alongside a gradual elimination of the Super Tax. The chamber noted that the combined impact of corporate tax, super tax, Workers Welfare Fund, and Workers Profit Participation Fund pushes the effective tax rate to nearly 46 percent.

It also highlighted that excessively high taxation on the banking sector could constrain economic growth by limiting banks’ ability to efficiently deploy capital, which in turn affects the availability and cost of working capital for businesses across the economy.

To retain skilled professionals, OICCI recommended abolishing the Super Tax and the 10 percent surcharge on higher-income salaried individuals, and capping the maximum personal income tax rate at 25 percent.

Additional proposals included rationalizing withholding taxes, reducing sales tax on goods from 18 percent to 17 percent with a gradual reduction to 15 percent, and reviewing minimum and alternate minimum tax provisions.

During the meeting, foreign investors raised operational concerns including delays in tax refunds, excessive compliance notices despite strong compliance histories, and weak coordination between federal and provincial tax systems.

OICCI also emphasized the importance of supporting export-oriented industrial sectors as a key driver of medium-term growth, stating that targeted policy support and, where necessary, flexibility within IMF programme frameworks should be considered to maintain competitiveness.

The chamber expressed hope that these measures would help establish a predictable and balanced tax regime, strengthen compliance, encourage investment, and support Pakistan’s transition toward sustainable, export-led growth.

The meeting was part of the Ministry of Finance’s ongoing budget formulation process and broader consultations with business and industry stakeholders led by the Federal Minister for Finance and Revenue.

Follow ProPakistani on Google News & scroll through your favourite content faster!