OICCI urges Pakistan to expand the tax base for Budget 2026–27, ease corporate and salary taxes, and fix refunds and compliance friction.
Key Takeaways
- OICCI wants Budget 2026–27 to focus on bringing new sectors into the tax net instead of squeezing existing filers.
- It proposes lowering corporate tax to 28% next year, then 25% over three years, while phasing out Super Tax.
- The chamber says stacked levies push the effective corporate burden near 46%, hurting investment decisions.
- Foreign investors flagged refund delays, repeated notices, and weak federal–provincial tax coordination.
- OICCI also asks for export-focused support and workable flexibility within IMF program frameworks.
Overseas investors, through OICCI, are urging Pakistan’s government to use Budget 2026–27 to widen the tax net and reduce heavy, layered taxes that they say discourage formal investment. The recommendations focus on predictable rates, simpler withholding structures, faster refunds, and a system that rewards compliance while bringing under-taxed sectors into documentation. The proposals also argue that export-led growth needs targeted support and less policy friction to stay competitive under IMF-linked reforms.
Why Overseas Investors Want A Wider Tax Base
OICCI’s core message for Budget 2026–27 is that Pakistan must stop squeezing the same small pool of compliant taxpayers. In its meeting with Minister of State Bilal Azhar Kayani, the chamber said fairness and predictability require a wider, documented tax net. It specifically pointed to agriculture, retail, wholesale, real estate, and services—sectors that often generate large economic activity but do not contribute proportionately to revenue.
OICCI linked the tax-net issue to investment confidence. When the burden keeps rising on existing filers, businesses plan defensively, informality becomes attractive, and policy credibility weakens. Documentation and digitisation can widen participation, improve traceability, and reduce discretionary enforcement. That shift matters to overseas investors who want stable rules, fewer surprises, and a system that rewards compliance instead of punishing it.
Corporate Tax And Super Tax: What OICCI Is Asking For
OICCI proposed lowering the corporate tax rate to 28 percent in FY2026–27 and then moving to 25 percent over three years, alongside a gradual elimination of the Super Tax. The chamber argued that the real burden is higher than the headline rate because add-on levies stack on top of each other and create a heavier effective take for formal businesses.
It highlighted that corporate tax, Super Tax, Workers Welfare Fund, and Workers Profit Participation Fund can push the effective corporate rate close to 46 percent. For investors comparing Pakistan with regional options, that number affects capital allocation, reinvestment decisions, and pricing strategy. A clear, phased path can help, but only if it is credible, consistent, and supported by a broader tax base that replaces revenue through inclusion rather than higher rates.
Banking And Salaried Taxes: Growth And Talent Concerns
OICCI warned that heavy taxation on the banking sector can constrain growth by limiting banks’ ability to deploy capital efficiently. If costs rise in the financial system, working capital becomes more expensive for businesses, and credit flow can slow during periods when firms need liquidity to manage inventory and payroll.
For individuals, OICCI recommended abolishing Super Tax and the 10 percent surcharge on higher-income salaried people, and capping the top personal income tax rate at 25 percent. The chamber tied this to talent retention: high effective rates can push skilled professionals to seek opportunities abroad or shift into informal arrangements. For Pakistan, that hurts productivity, weakens documentation, and reduces long-term revenue capacity.
Refunds, Compliance Notices, And Export-Led Stability
Foreign investors raised operational issues such as delayed refunds, repeated notices despite strong compliance histories, and weak coordination between federal and provincial tax systems. These frictions matter because they block cash flow, increase admin cost, and make “doing the right thing” feel expensive for compliant firms.
OICCI proposed rationalising withholding taxes, cutting sales tax from 18 percent to 17 percent with a gradual path to 15 percent, and reviewing minimum and alternate minimum tax rules. It also urged support for export-oriented industry, including workable flexibility within IMF programme frameworks to protect competitiveness. The budget’s real test will be whether reforms reduce compliance noise, speed up refunds through digitised processes, and give investors predictable timelines and enforcement standards.
