The Pakistan Business Council (PBC) has put forward key recommendations for the upcoming 2025-26 budget. The focus is on reducing corporate tax rates, revising the Super Tax on high-income earners, and promoting sectors where Pakistan holds a competitive edge. These changes aim to drive business growth, boost tax revenue, and create a more sustainable economy.
PBC emphasized that economic growth should be the main priority, which will naturally increase tax revenue. It highlighted the importance of an equitable tax system, competitive tax rates, long-term policy consistency, and a focus on taxing profit rather than turnover or assets. It also stressed the need to simplify and digitize tax returns while ensuring minimal impact on business cash flow.
One of PBC’s significant recommendations is the gradual reduction of the Super Tax rate on non-export profits by 2% per year. It also proposed introducing progressive slabs for Super Tax instead of a flat rate. According to PBC, a high tax-to-GDP ratio should not be the main goal; instead, the government should focus on policies that encourage investment, job creation, exports, and reduced dependence on imports. This approach will contribute to sustainable and equitable economic growth.
PBC suggested multiple measures to boost investment. It proposed encouraging corporatization and listing of businesses, promoting long-term shareholding, and supporting business expansion and diversification. Furthermore, it recommended that all resident taxpayers should submit wealth reconciliations, while the formal sector should only verify tax credentials for its direct suppliers and customers registered with the Federal Board of Revenue (FBR).
To improve tax compliance, PBC proposed levying an advance tax of 39% on non-filer commercial and industrial customers’ electricity and gas bills. If they fail to comply, their utility connections should be disconnected. Additionally, PBC recommended taxing the gain on the sale of land at 39% if disposed of within 10 years, while allowing a reduced rate of 15% for holding periods exceeding a decade. Currently, land sale gains are taxed at 15%, whereas company profits are taxed at 46%, including corporate tax, Super Tax, Workers’ Welfare Fund, and Workers’ Participation Fund.
The council also suggested phasing out tax concessions for tribal areas and implementing an Electronic Data Interface (EDI) with major trading partners to enhance transparency. To support the formal corporate sector, PBC proposed gradually reducing the corporate tax rate by 1% annually until it reaches 25%, aligning with other emerging economies. Similarly, it recommended reducing the General Sales Tax (GST) rate by 1% per year until it reaches 15%.
Other key proposals included eliminating the minimum turnover tax for listed companies and ensuring that future taxation is not based on the balance sheets of banks and businesses. PBC also urged the government to tax income rather than declared overseas assets of Pakistani tax residents. Furthermore, it recommended lowering withholding tax (WHT) on exporters from 2% to 1%, rationalizing WHT for the services sector, and reducing WHT on recyclable materials to create a level playing field between the formal and informal sectors.
Lastly, PBC proposed exempting listed companies from Section 8B of the Sales Tax Act 1990, which currently limits the offset of input tax to 90% of output tax. By implementing these recommendations, the government can encourage business growth, increase investment, and ensure a fair and effective tax system that benefits Pakistan’s economy.
Read Also: Exciting Updates on the Tri-Nation ODI Series Schedule in Karachi!
