OICCI criticizes govt over corporate tax gaps in FY26 budget

June 12, 2025 (MLN): The Overseas Investors Chamber of Commerce and Industry (OICCI) has expressed disappointment over the government’s limited progress in addressing the inequitable corporate tax rate in the recent budget.

While the marginal reduction in Super Tax rates is acknowledged, OICCI reiterated the urgent need for a comprehensive overhaul of tax structures to enhance Pakistan’s competitiveness and attract foreign investment, as per the press release issued today.

The Chamber also noted the absence of meaningful reductions in government expenditure, which could have helped narrow the budget deficit.

Fiscal discipline remains critical to ensuring macroeconomic stability, and OICCI urged the government to prioritize expenditure rationalization in its budgetary measures.

OICCI regretted the government's missed opportunity to broaden the tax base in the current budget.

In particular, the absence of any concrete strategy to document Pakistan's substantial Rs9 trillion cash-based informal economy is a critical shortcoming.

This measure is essential for meaningful revenue enhancement and economic formalization, something the Chamber has consistently advocated for.

OICCI welcomed several positive reforms, including simplified tax returns for salaried individuals and small businesses, the nationwide rollout of e-invoicing, and the expansion of POS systems, all measures long advocated by the Chamber.

However, their success hinged on effective implementation, and OICCI stresses the need for transparency and consistency in execution.

The increase in the tax exemption threshold for salaried individuals (from Rs0.6 million to Rs1.2m) and the reduction in their tax rate (from 5% to 1%) are commendable steps that align with OICCI’s recommendations.

However, these measures still fall short of providing impactful and necessary relief to reduce the ongoing brain drain in the country.

OICCI also acknowledged the government’s gradual phasing out of tax exemption on FATA and PATA and the government’s 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.

Despite these advancements, the budget falls short of introducing transformative policies for the corporate sector.

OICCI emphasized that gradually rationalizing tax slabs and reducing the overall tax burden on businesses are essential to promoting a more investment-friendly environment.