FPCCI welcomes tax relief in Pakistan budget 2026-27, calls for shift to industrial growth

Pakistan's top business chamber welcomed targeted tax relief measures in the federal budget 2026-27 but said the government must now move beyond macroeconomic stabilization toward sustained industrial and export-led growth.

The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) said the budget reflected partial progress but fell short of the structural reforms needed.

What did FPCCI say about the Pakistan budget 2026-27?

FPCCI president Atif Ikram Sheikh acknowledged encouraging signs of economic stability, including GDP growth of 3.7% and a fiscal deficit of 0.7% of GDP. But he said the federal budget must do more than balance revenues and expenditures.

It must guide Pakistan's transition from stabilization to robust economic growth, he added.

Which budget measures did FPCCI welcome?

The federation said several of its pre-budget recommendations were incorporated into the PKR 18.7 trillion budget. Among the measures it welcomed were the abolition of the Capital Value Tax on foreign assets and the removal of the Federal Excise Duty on international business class travel.

FPCCI also praised changes to the super tax, including its abolition across six income slabs up to PKR 500 million, a reduction in the rate from 10% to 8% for higher incomes, and a full waiver for exporters. The removal of a surcharge on salaried individuals and across-the-board income tax reductions also drew support.

Other welcomed measures included the extension of a 0.25% final tax rate on IT exports until June 2029, a 50% cut in withholding tax rates for filers in the construction sector, a new 1% fixed sales tax scheme for retailers with annual sales below PKR 200 million, and a revised 1.25% minimum tax for exporters.

What concerns did FPCCI raise about the budget?

Despite welcoming several measures, Sheikh said broader economic indicators remained troubling. He said the investment-to-GDP ratio stood at 14.38% while the savings rate had declined to 14.13%. Urban poverty had risen from 11% to 17%, which he said reflected weakening business activity across the country.

FPCCI also flagged the Federal Board of Revenue's tax collection target of PKR 15.2 trillion, a 17% increase over the previous year, and a petroleum levy target of PKR 1.7 trillion, up 18%. The federation warned both targets risked stoking inflation, particularly given high international oil prices.

What proposals did FPCCI say were left out of the budget?

The federation said several of its key demands were not addressed in the budget speech. These included restoring the Final Tax Regime for exporters, reducing corporate and turnover tax rates, eliminating the minimum tax regime and further tax, withdrawing the repeal of Section 8B of the Sales Tax Act, and expanding digitalization across the economy.

Sheikh said the budget's measures sent mixed signals on industrialization, job creation and higher growth. He called on the government to prioritize productivity enhancement, export diversification and reducing the cost of doing business in the next phase of reforms.

FPCCI said it would not issue a final assessment immediately. It plans to conduct a detailed review of the Finance Bill over 48 hours in consultation with chambers, trade associations and other stakeholders before releasing a comprehensive response.