OICCI proposes corporate tax rate cut to 28%, broader tax base to boost revenue

The Overseas Investors Chamber of Commerce and Industry (OICCI) has urged the government to reduce the corporate tax rate to 28% for fiscal year 2026, with a structured plan to gradually lower it by one percentage point annually, reaching 25% within five years.

In its budget proposals on Tuesday, OICCI emphasized that ensuring a proportionate tax contribution across all sectors, in alignment with their share of GDP, could help raise Pakistan’s tax-to-GDP ratio to around 14%, up from the current less than 10%.

The proposed tax reduction is aimed at improving Pakistan’s corporate tax structure, making it more competitive with other emerging economies.

To expand the tax base, OICCI called for the formal inclusion of traditionally under-taxed sectors—including agriculture, real estate, and wholesale/retail trade—into the tax net.

The chamber also proposed an immediate reduction in the sales tax rate on goods to 17%, followed by a gradual annual cut of one percentage point to bring it down to 15%, in line with the regional average.

The organization further advocated for harmonization of sales tax rates between federal and provincial governments to simplify compliance and encourage business growth. OICCI also recommended phasing out the super tax over three years, to establish a more predictable and business-friendly fiscal environment.

OICCI raised concerns over the illegal cigarette trade, which causes tax losses exceeding PKR 300 billion annually, calling for stricter enforcement measures to curb revenue leakage.

“Pakistan must act decisively to modernize its tax system,” OICCI President Yousaf Hussain said in a statement.

“Our proposals are focused on creating a transparent, predictable, and equitable taxation framework that encourages economic growth, investment, and job creation.”

In the energy sector, OICCI recommended that all major petroleum products be classified as taxable supplies at appropriate sales tax rates, ensuring fairer contributions from the industry.

Additionally, OICCI urged the Federal Board of Revenue (FBR) to release over PKR 120 billion in pending tax refunds, citing the need for consistent and transparent policy implementation to build investor confidence and attract greater foreign direct investment.

The chamber also suggested increasing the taxable income threshold to PKR 1.2 million annually per individual, while maintaining mandatory tax filing for those earning more than PKR 0.6 million.

“With the right reforms and policy consistency, Pakistan can significantly expand its revenue base, restore business confidence, and position itself as a more attractive destination for investment,” said OICCI Secretary General M. Abdul Aleem.