ICMA unveils smart tax plan for budget 2026–27

March 18, 2026 (MLN): The Institute of Cost and Management Accountants of Pakistan (ICMA) has submitted a comprehensive set of tax revenue generation proposals to the Tax Policy Office (TPO) at the Ministry of Finance in preparation for the Federal Budget 2026–27.

Developed by ICMA’s Research and Publications Department, the recommendations aim to broaden the tax base, formalize emerging sectors, enhance transparency, and create equitable and sustainable revenue streams to strengthen Pakistan’s fiscal framework.

The proposals are organized into seven key segments covering new revenue initiatives, climate and green taxation, urban and transport revenue measures, corporate and financial services, formalization of the digital and informal economy, agriculture and rural income, and wealth and luxury taxation.

ICMA has a strong track record of shaping national tax policy. Several proposals from its previous submissions were incorporated into the Federal Budget FY2025-26.

Notable initiatives included the introduction of withholding tax on high-value pensions to tax affluent retirees while protecting low- and middle-income pensioners.

Other measures brought digital content creators, including YouTubers and freelancers, into the tax net, formalized emerging economic activity, and promoted fiscal fairness.

Among the new revenue initiatives, ICMA has proposed a Digital Services Tax to capture revenue from Pakistan’s rapidly expanding digital economy, including streaming platforms, gaming, mobile applications, and other digital media services.

This measure is expected to formalize digital businesses, encourage compliance, and align Pakistan with international best practices.

For online and speculative gaming, a regulated licensing and taxation framework is recommended, allowing only government-licensed operators to function while paying a 2% tax on gross revenues.

This would convert informal and illegal activities into a monitored and taxed sector, while protecting consumers and creating a stable revenue source.

To leverage corporate visibility, ICMA recommends a levy on corporate advertising and brand promotion for enterprises with turnover above Rs100 million.

Utilizing invoices already maintained by advertising agencies, this measure is designed to ensure transparency, promote equitable contributions from large businesses, and generate additional revenue.

The Additional Residential Property Tax (ARPS) targets second homes or investment properties valued at Rs20m and above, leaving first-time buyers and primary residences exempt.

This tax aims to curb speculative property purchases and promote efficient utilization of housing stock.

ICMA also advocates the nationwide adoption of Building Information Modelling (BIM) to streamline planning, approvals, and monitoring of both public and private infrastructure projects.

Complementary proposals include Green Building Incentives offering tax concessions on certified eco-friendly buildings, a Commercial Building Safety Levy to enhance regulatory compliance, and a one-time tax dispute settlement scheme.

They also include a Financial Transaction Tax on equities, derivatives, and digital assets, a National Consumer Receipt Lottery to strengthen retail documentation, and a Windfall Gains Tax on extraordinary profits in sugar, oil and gas, and fertilizer sectors.

These measures collectively aim to formalize economic activity, improve compliance, and generate new revenue streams.

In the area of climate and green taxation, ICMA recommends property tax relief for EV charging operators to encourage private investment in grid-compliant public and commercial charging infrastructure.

Other proposals include a Landfill Disposal Tax to reduce municipal and industrial waste dumping, a Progressive Carbon and Pollution Levy on high-emission industrial units, a Green Transport Levy on fuel purchases and high-emission vehicles, and a Carbon Market Levy to formalize carbon trading.

These measures are intended to promote sustainable development while generating dedicated green revenue for environmental protection and low-carbon initiatives.

For urban and transport revenue measures, ICMA has proposed an Annual Vacant Urban Land Tax targeting undeveloped city plots, a One-Time Betterment Levy on incremental land value gains from state-funded infrastructure projects.

It also includes a Distance-Based Urban Road Usage Fee, including for electric vehicles that do not contribute through fuel taxes.

These initiatives aim to reduce speculative land holdings, encourage productive land use, support efficient urban planning, and provide stable funding for infrastructure maintenance.

The remaining ICMA proposals covering corporate, financial, agricultural, and wealth taxation will be released in subsequent press updates, completing a broad framework aimed at boosting Pakistan’s economic growth, improving fiscal transparency, and ensuring a fair and sustainable revenue system.

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