OICCI disappointed by Pakistan’s incremental budgetary measures

The Overseas Investors Chamber of Commerce and Industry (OICCI) expressed disappointment over the government’s limited progress in addressing inequitable corporate tax rates in the recent budget.

While acknowledging the marginal reduction in super tax rates, OICCI reiterated the urgent need for a comprehensive overhaul of tax structures to improve Pakistan’s competitiveness and attract foreign investment.

The chamber also noted the absence of meaningful cuts in government spending, which could have helped narrow the budget deficit. Fiscal discipline remains critical to ensuring macroeconomic stability, and OICCI urged the government to prioritize expenditure rationalization in its budgetary measures.

OICCI criticized the government’s missed opportunity to broaden the tax base, particularly the lack of a concrete strategy to document Pakistan’s substantial 9 trillion rupee ($32 billion) cash-based informal economy—a measure the chamber has long advocated as crucial for revenue enhancement and economic formalization.

The group welcomed some positive reforms, including simplified tax returns for salaried individuals and small businesses, the nationwide rollout of e-invoicing, and the expansion of point-of-sale (POS) systems—all measures it had previously recommended. However, OICCI stressed that their success depends on effective implementation, calling for transparency and consistency in execution.

The increase in the tax exemption threshold for salaried individuals—from 600,000 rupees to 1.2 million rupees—and the reduction in their tax rate from 5% to 2.5% were described as commendable but insufficient to curb brain drain.

OICCI also acknowledged the government’s gradual phaseout of tax exemptions for the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA), as well as stricter measures against non-compliant taxpayers, including restrictions on property and vehicle purchases, overseas asset transfers, and enhanced penalties. Such steps, it said, are vital for improving tax compliance and broadening the revenue base.

Despite these changes, OICCI said the budget lacked transformative policies for the corporate sector. It emphasized that gradually rationalizing tax slabs and reducing the overall tax burden on businesses are essential to fostering an investment-friendly environment.