The federal government is considering reducing the average corporate tax and providing the broader tax exemptions in the coming budget for the fiscal year 2025-26, as it looks forward to supporting economic activity and creating job opportunities by taking advantage of the improved financial space that was created through low global oil prices and a significant decrease in interest rates.
This potential shift in fiscal policy comes after the State Bank in Pakistan reduced the main policy price by 10 points since June 2024, which led to a decrease to 12 %, significantly reduced the costs of government debt service.
Speaking in the Karaki Chamber of Commerce and Industry (KCCI) on Saturday, a special assistant to the Prime Minister for Industries and Production, Aaron Akhtar Khan, said, “Rationalizing corporate tax is very important.
Currently, the basic corporate tax rate has remained 29 % since the 21st fiscal year, but imposing a super -tax payment to 39 % for companies that exceed annual profits exceeding 150 million rupees. For banks, the burden is heavier – with a super -peak tax by 15 % last year and remains by 14 % in 2025. The tax may be gradually reduced to 13 % in 2026 and 2027.
Akhtar in both KCCI and then the Pakistani Business Council (PBC) stated that it prefers to completely cancel the high tax in the FY26 budget. He said: “The government is seriously evaluating the removal of the super tax and providing more tax exemptions for industries, especially now after we have gained space to breathe financially.”
However, it has warned that Pakistan’s continuous participation with the International Monetary Fund may limit the scope of immediate financial measures. “There are restrictions due to the International Monetary Fund program, but everything is not dictated by donor agencies. Many of our problems are imposed on themselves, and we can be fixed,” in reference to the incompetence of bureaucracy and organizational obstacles that suffer from commercial operations.
With the highlight of these issues, Akhtar revealed that companies are currently facing approximately 350 requirements for issuing certificates to create operations, many of which include mobility in the federal red tape and provinces. “This must disappear,”
He also pointed out that relief is considered under the export financing plan to support exporters and stressed that the work is underway in a new industrial policy, describing it as “the first task that the Prime Minister has identified”, with the completion of half of the work already.
