The Overseas Investors Chamber of Commerce and Industry (OICCI) on Tuesday voiced disappointment over the government’s limited progress in addressing inequitable corporate tax rate in the proposed federal budget for FY2025-26.
In a statement, the OICCI acknowledged the “marginal” reduction in the ‘super tax,’ but reiterated the urgent need for a comprehensive overhaul of tax structures to enhance Pakistan’s competitiveness and attract foreign investment. Noting the absence of any meaningful reductions in government expenditure, it said this could have helped narrow the budget deficit. “Fiscal discipline remains critical to ensuring macroeconomic stability, and OICCI urges the government to prioritize expenditure rationalization in its budgetary measures,” it said.
The OICCI further lamented the government’s failure to enact any concrete strategy to broaden the tax base, particularly by documenting the country’s substantial Rs. 9 trillion cash-based informal economy.
However, the representative body welcomed positive reforms such as simplified tax returns for salaried individuals and small businesses; nationwide rollout of e-invoicing; and expansion of POS systems. It stressed that the success of such initiatives requires effective implementation, and called for transparency and consistency in execution.
Describing as commendable the proposed increase in tax exemption threshold for salaried individuals and the reduction in their tax rate, it said this step aligned with the OICCI’s recommendations but still fell short of providing impactful and necessary relief to reduce the ongoing brain drain from the country.
The OICCI also acknowledged the government’s gradual phasing out of tax exemption on FATA and PATA and the stricter measures against non-compliant taxpayers, including restrictions on property and vehicle purchases, asset transfers abroad, and enhanced penalties. Such actions are crucial for improving tax compliance and broadening the revenue base, it maintained.
Despite these advancements, however, the OICCI emphasized the budget falls short of introducing transformative policies for the corporate sector. “OICCI emphasizes that gradually rationalizing tax slabs and reducing the overall tax burden on businesses are essential to promoting a more investment-friendly environment,” it added.