KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) President Yousaf Hussain on Tuesday urged the government to double the income tax exemption limit to Rs1.2 million for individuals in the upcoming budget to boost consumption.

He, however, suggested that mandatory tax return filing should remain unchanged for all individuals earning more than Rs0.6 million annually, he told a press conference at the OICCI head office.

He also recommended reducing the sales tax rate on goods to 17 per cent immediately, followed by a gradual 1pc annual reduction to bring it down to 15pc, matching the regional average.

He added that harmonisation of sales tax rates between the federal and provincial governments is critical to simplifying compliance and encouraging business growth.

He called for gradually abolishing the ‘super tax’ within three years to create a more predictable and business-friendly fiscal environment.

Govt asked to phase out super tax, gradually cut corporate tax

Mr Hussain emphasised that a more equitable contribution across all sectors, proportionate to their share of GDP, could increase the tax-to-GDP ratio to approximately 14pc, which currently stands at less than 10pc.

He recommended reducing the corporate tax rate to 28pc for FY26, with a structured plan to lower it by 1pc annually, reaching 25pc within five years. This progressive reduction will align Pakistan’s corporate tax structure with other emerging economies and boost competitiveness.

On growing the tax base, OICCI chief stressed the urgent need for bringing traditionally under-taxed sectors — agriculture, real estate, and wholesale/retail trade — into the formal tax net.

On illegal cigarette trade, which results in tax losses exceeding Rs300 billion annually, he said strict enforcement measures are necessary to plug this major revenue leakage.

“Pakistan must act decisively to modernize its tax system,” Hussain said, recommending that all major petroleum products be treated as taxable supplies at the appropriate sales tax rates, ensuring a fairer and broader tax contribution from the sector.

Published in Dawn, April 30th, 2025