In its recommendations for the federal budget 2025-26, the Overseas Investors Chamber of Commerce and Industry (OICCI) has outlined a comprehensive tax reform roadmap aimed at broadening the tax base, improving compliance, facilitating investment, and enhancing the Federal Board of Revenue (FBR)’s revenue generation.
The OICCI’s recommendations also emphasize that a more equitable contribution from all sectors, proportionate to their share of GDP, can potentially increase the tax-to-GDP ratio to approximately 14 percent from its current value of less than 10 percent.
Key among representative body’s recommendations is reducing the Corporate Tax Rate to 28 percent, with a structured plan to lower it by one percent annually until it hits 25 percent within five years. This progressive reduction, it says, would align the country’s corporate tax structure with other emerging economies and boost competitiveness.
On sustainably growing the tax base, the OICCI has stressed on the urgent need to bring traditionally under-taxed sectors such as agriculture, real estate, and wholesale/retail trade, into the formal tax net. Additionally, it has recommended reducing the sales tax rate on goods to 17 percent, followed by a gradual one percent annual reduction to bring it down to 15 percent, matching the regional average. Harmonization of sales tax rates between the federal and provincial governments is critical to simplifying compliance and encouraging business growth, it states.
The Chamber has further called for the gradual abolishment of Super Tax within three years to create a more predictable and business-friendly fiscal environment.
Additionally, the OICCI has highlighted the persistent challenge posed by the illegal cigarette trade, noting it causes annual tax losses in excess of Rs. 300 billion, calling for strict enforcement measures to address the issue. “Pakistan must act decisively to modernize 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,” he added.
In the energy sector, the OICCI has recommended treating all major petroleum products as taxable supplies at the appropriate sales tax rates, ensuring fairer and broader tax contribution. It has also urged measures to facilitate the release of over Rs. 120 billion in pending tax refunds by the FBR, emphasizing that consistent and transparent policy implementation is critical to building investor confidence and attracting greater foreign direct investment.
The OICCI has also suggested increasing the taxable income threshold to Rs. 1.2 million annually, adding mandatory tax filing should remain unchanged for all income earned in excess of Rs. 0.6 million.
“With the right reforms and policy consistency, Pakistan can significantly expand its revenue base, restore business confidence, and position itself as a more attractive destination for investment,” said OICCI Secretary General M. Abdul Aleem.