FPCCI proposes sweeping tax cuts, scrapping super tax in FY27 budget proposals

Pakistan’s top business body has submitted budget proposals for fiscal year 2026-27 to the Finance Ministry, calling for tax cuts, incentives for exporters and the abolition of the super tax to support economic growth and investment.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) proposed restoring the final tax regime for goods exporters to help boost exports, according to recommendations submitted ahead of the federal budget.

The FPCCI also recommended maintaining the 0.25% tax rate on IT exports until 2035, saying a long-term policy framework could help increase Pakistan’s information technology exports from USD 3.8 billion to USD 10 billion.

“Long-term consistency in tax policy can significantly enhance IT export growth,” FPCCI President Atif Ikram Sheikh said.

The business body proposed increasing the turnover threshold for small and medium enterprises from PKR 250 million to PKR 500 million and linking it to the consumer price index to account for inflation.

In its recommendations, the FPCCI also called for reducing the income tax rate for manufacturers from 29% to 20% to encourage industrial expansion and improve competitiveness.

The organization urged the government to abolish the super tax, arguing that it discourages investment.

“The super tax has become a major hurdle to investment and should be completely eliminated,” Sheikh said.

The FPCCI further proposed a 5% reduction in income tax rates for salaried individuals, recommending that the maximum rate be reduced from 35% to 30%.

It also called for the abolition of the 9% surcharge on salaried taxpayers and proposed increasing the non-taxable income threshold from PKR 600,000 to PKR 1.2 million annually.

Sheikh said Pakistan’s economy has faced significant challenges since 2022 but added that the country is now moving toward economic stability.

Referring to regional tensions, Sheikh said Pakistan has demonstrated its ability to respond to external aggression and is playing a constructive diplomatic role in efforts to address tensions in the Middle East and the Iran-U.S. dispute.

He said growing international confidence in Pakistan reflects sustained diplomatic efforts and strategic foresight, adding that diplomatic gains should be translated into economic benefits for the country.

Sheikh expressed hope that the 2026-27 federal budget will reflect Pakistan’s stronger diplomatic profile and said the government, FPCCI and the business community can jointly address the country’s economic challenges.