OICCI Proposes Major Tax Reforms for Budget 2026-27

The Overseas Investors Chamber of Commerce and Industry (OICCI) has formally submitted a comprehensive set of fiscal reform proposals in connection with the Federal Budget 2026–27, advocating for a gradual reduction in corporate taxation and the elimination of the super tax. These recommendations were presented during consultative discussions with the Ministry of Finance, including a meeting with Minister of State for Finance and Revenue Bilal Azhar Kayani.

The proposals are positioned within the broader objective of establishing a more streamlined, predictable, and transparent tax regime to enhance Pakistan’s attractiveness for foreign investment. OICCI has recommended that the corporate tax rate be reduced to 28% in FY2026–27, followed by a phased decrease to 25% over a three-year horizon. Concurrently, the chamber has proposed the complete withdrawal of the super tax, highlighting that the cumulative effect of corporate tax, super tax, and ancillary levies results in an effective tax burden of approximately 46%.

In addition, OICCI has advised a reduction in the general sales tax (GST) rate on goods from the current 18% to 17%, with a medium-term target of 15%. The chamber further emphasized the need for rationalisation of withholding tax regimes and a comprehensive reassessment of minimum tax provisions to reduce distortions within the tax structure.

Addressing workforce-related concerns, the chamber proposed the abolition of the super tax and the existing 10% surcharge applicable to higher-income salaried individuals, alongside a recommendation to cap the maximum personal income tax rate at 25%. These measures are intended to mitigate talent outflow and enhance competitiveness in attracting and retaining skilled professionals.

OICCI also raised reservations regarding the elevated tax burden imposed on the banking sector, cautioning that such measures may constrain capital allocation and increase the cost of credit for businesses, thereby impacting overall economic activity.

From an operational perspective, foreign investors highlighted persistent administrative challenges, including delays in the processing of tax refunds, frequent issuance of compliance notices, and insufficient coordination between federal and provincial tax authorities.

The chamber underscored the importance of broadening the tax base by incorporating under-taxed or undocumented sectors—such as agriculture, retail, real estate, and services—into the formal tax net, rather than imposing additional burdens on compliant taxpayers.

Furthermore, OICCI called for targeted policy support for export-oriented industries to maintain global competitiveness, noting that such initiatives could be structured in alignment with Pakistan’s commitments under the International Monetary Fund (IMF) programme.

In response, the Ministry of Finance indicated that stakeholder consultations will continue as part of the budget formulation process, with a focus on implementing reforms aimed at enhancing transparency, improving compliance mechanisms, and expanding the overall tax base.