KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has called for broadening the tax base, improving compliance, facilitating investment and enhancing the Federal Board of Revenue’s (FBR) revenue generation capacity.
In its proposals for the budget for FY2025-26, the OICCI emphasised that a more equitable contribution across all sectors -- proportionate to their share of GDP -- could increase the tax-to-GDP ratio to approximately 14 per cent, compared to the current level of under 10 per cent.
Among its key recommendations is the reduction of the corporate tax rate to 28 per cent for FY2025-26, with a structured plan to reduce it by one percentage point annually, reaching 25 per cent within five years. This gradual reduction would align Pakistan’s corporate tax regime with those of other emerging economies and enhance its global competitiveness.
To sustainably grow the tax base, the OICCI highlighted the urgent need to bring traditionally under-taxed sectors -- agriculture, real estate and wholesale/retail trade -- into the formal tax net.
The chamber also recommended reducing the sales tax rate on goods to 17 per cent immediately, followed by an annual one percentage point reduction until it reaches 15 per cent, in line with regional averages. It stressed that harmonising sales tax rates between the federal and provincial governments is vital to simplifying compliance and encouraging business growth.
Further proposals include the phased abolition of the Super Tax within three years to foster a more predictable and business-friendly fiscal environment. The OICCI also drew attention to the ongoing issue of illegal cigarette trade, which results in tax losses exceeding Rs300 billion annually. It urged strict enforcement measures to curb this major revenue leakage.
“Pakistan must act decisively to modernise its tax system,” said OICCI President Yousaf Hussain. “Our proposals are focused on creating a transparent, predictable and equitable taxation framework that encourages economic growth, investment and job creation.”
In the energy sector, the OICCI recommended that all major petroleum products be treated as taxable supplies at the appropriate sales tax rates, to ensure a fairer and broader contribution from the sector.
It also urged measures to expedite the release of over Rs120 billion in pending tax refunds by the FBR, noting that consistent and transparent policy implementation is essential for building investor confidence and attracting greater foreign direct investment (FDI).
One of the chamber’s notable suggestions is to raise the taxable income threshold to Rs1.2 million annually per individual. However, to maintain and expand the taxpayer base, mandatory tax filing should continue to apply to all individuals earning over Rs600,000 per year.
OICCI Secretary General M Abdul Aleem said that with the right reforms and consistent policy execution, Pakistan could significantly expand its revenue base, restore business confidence and position itself as a more attractive investment destination.