Pakistan's Finance Act 2026 boosts earnings outlook for listed firms, JS Global says

The Finance Act 2026 is expected to lift corporate earnings and investor sentiment at the Pakistan Stock Exchange.

Lower super tax rates and targeted sector incentives are improving the profitability outlook for a wide range of listed companies. JS Global Research published the assessment this week.

What is the biggest change in the Finance Act 2026 for companies?

The most consequential measure is a cut in super tax. Companies reporting profit after tax above PKR 500 million get a two-percentage-point reduction, though the relief excludes fertilizer, exploration and production, and banking firms. JS Global expects this to support earnings growth, dividend capacity and valuations across several sectors.

Which exporters benefit most from the new law?

The Finance Act fully abolishes super tax for companies earning more than 80% of annual turnover from exports. JS Global called this particularly positive for large export-oriented manufacturers, especially textile firms. Interloop Ltd is expected to be among the biggest beneficiaries, gaining full exemption from a levy that previously stood at 10%.

Gul Ahmed Textile Mills and Artistic Denim Mills are also expected to gain. Companies operating under the Final Tax Regime, along with loss-making exporters paying minimum turnover tax, are unlikely to benefit despite meeting the export threshold.

How will the cement sector be affected?

Domestic cement producers are also expected to benefit materially from the lower tax burden. JS Global named Lucky Cement, Cherat Cement, D.G. Khan Cement, Pioneer Cement, Maple Leaf Cement, Kohat Cement, Attock Cement and Fauji Cement as likely to report stronger after-tax earnings in FY27 and FY28 as effective tax rates decline.

The brokerage said the savings should flow directly into earnings per share. This comes as manufacturers continue to face elevated operating costs.

What relief is there for consumer and pharmaceutical firms?

The Finance Act adds support for consumer and pharmaceutical companies through lower super tax rates and the withdrawal of a proposed federal excise duty on selected beverages. The government scrapped a planned 20% excise duty on mineral water, electrolyte drinks and hydration beverages, removing a cost burden for manufacturers and consumers.

JS Global named Nestlé Pakistan, Murree Brewery, Abbott Laboratories, GlaxoSmithKline Pakistan and Ecopack as key beneficiaries. It also expects National Foods, AGP Limited, GlaxoSmithKline Pakistan and Pak Aluminium Beverage Cans to record earnings gains from the super tax cut.

How does the budget protect local auto assemblers?

The legislation strengthens protection for domestic vehicle manufacturers by sharply raising excise duties on imported vehicles. Completely built-up electric vehicles valued up to $75,000 stay exempt from excise duty. Vehicles priced between $75,000 and $110,000 face a 30% duty, while those above $110,000 face a 40% rate.

For imported combustion-engine vehicles, excise duties rise to 86% for engines between 2,000cc and 3,000cc and 92% for vehicles above 3,000cc, substantially higher than originally proposed. JS Global said Ghandhara Automobiles should benefit from both the lower super tax and stronger protection from imported competition in the premium segment.

What changes affect aviation, telecom and insurance?

The government has exempted aircraft and aircraft parts imports from general sales tax for all Pakistan-registered airlines, broadening relief that was originally limited to PIA. JS Global said this should lower capital expenditure for airlines pursuing fleet renewal.

The government also proposed letting taxes on imported mobile phones be paid in installments through PTA's device registration system, which could reduce upfront costs and support handset sales, with Airlink among likely beneficiaries. Separately, the concessional 10% tax rate on life insurance and family takaful payouts will now apply for four years, down from the previously proposed one to seven years.

What does the Finance Act mean for footwear and equities overall?

The legislation also extends standard GST under the Third Schedule to all footwear manufacturers except those using fully digitally integrated, point-of-sale compliant retail channels. This is expected to favour companies with stronger digital infrastructure and tax compliance.

JS Global views the Finance Act 2026 as broadly supportive for Pakistan's equity market. The brokerage said lower super tax rates, exporter exemptions, and sector-specific relief should strengthen corporate earnings and reinforce investor confidence in the PSX through FY27 and beyond.