Pakistan Business Council urges scrapping of Super Tax, corporate tax cuts ahead of budget

The Pakistan Business Council has called on the government to abolish the Super Tax, reduce corporate income tax rates and raise income tax thresholds for salaried individuals, warning that the current taxation regime is undermining investment, accelerating brain drain and eroding Pakistan’s regional competitiveness.

In its budget proposals, the business lobby said the continuation of the Super Tax, imposed retrospectively through the Finance Act 2022, has pushed the effective tax burden on shareholders in holding company structures to as high as 68.09%, discouraging reinvestment and export-led growth.

Pakistan’s corporate sector is facing one of the highest effective tax regimes in the region, the council said, arguing that the Super Tax is neither progressive nor investment-friendly because it applies to the entire profit once a threshold is crossed instead of operating on a marginal basis.

The council demanded the immediate elimination of the levy or a clearly defined phase-out timeline. It also proposed that export-oriented industries be fully exempted from the Super Tax to encourage expansion and reinvestment.

Business leaders warned that excessive taxation is increasing the cost of doing business at a time when Pakistan is struggling to attract foreign direct investment and revive industrial growth.

The council also called for a gradual reduction in the standard corporate income tax rate from 29% to 25% over three years, saying Pakistan’s current rate is significantly higher than many competing Asian economies.

It proposed that listed companies receive the first round of tax relief to incentivize new listings on the Pakistan Stock Exchange and deepen capital markets.

According to the council, lowering corporate taxes would improve competitiveness, support job creation and help formal-sector businesses expand amid mounting economic pressures.

On the salaried class, the council urged the government to remove the recently imposed 9% surcharge on annual taxable salaries exceeding PKR 10 million, arguing that highly skilled professionals are increasingly relocating abroad or shifting to the undocumented economy due to punitive taxation.

The council said compression of income tax slabs introduced in recent budgets has sharply increased the tax burden on middle- and upper-income salaried professionals.

“The formal salaried sector is carrying a disproportionate tax burden,” the council said, adding that retaining skilled professionals is critical for sustaining productivity and improving documentation of the economy.

The organization proposed restoring the previous highest tax slab of 35% only for annual incomes exceeding PKR 120 million, instead of applying elevated rates to lower income bands.

The council also called for reforms in services-sector taxation, saying listed services companies should be shifted fully to the normal tax regime instead of facing heavy minimum and advance taxes under multiple provisions of the Income Tax Ordinance.

It recommended allowing adjustable advance taxes on imported capital equipment for the services industry, similar to concessions available to industrial undertakings.

Analysts say the proposals are likely to intensify debate ahead of the federal budget as the government attempts to balance fiscal consolidation targets under an International Monetary Fund program with demands from businesses seeking lower taxes and investment incentives.