LAHORE: The Overseas Investors Chamber of Commerce and Industry (OICCI) has urged the government to immediately freeze all preferential tax treatments — including new exemptions, zero-rating and special regimes — whether introduced through SROs or legislation, unless routed through a fully operational Tax Policy Office (TPO) with a published rationale.

In a special report titled Pakistan’s Tax Paradox, the OICCI describes Pakistan’s tax system as one characterised by a narrow tax base and high tax rates, with tax revenues remaining largely stagnant as a share of GDP despite growth in absolute collections.

It notes that Pakistan’s tax-to-GDP ratio has remained between 9 and 10 per cent for over a decade, although reforms have recently pushed it into double digits, reaching 10.3pc in FY25.

However, this remains well below international benchmarks. According to the World Bank and the IMF, a tax-to-GDP ratio exceeding 15pc is essential for sustainable growth, poverty reduction and the provision of basic public services.

The report highlights that OECD countries collect taxes equivalent to 34pc of GDP, while the Asia-Pacific average stands at 19.3pc. Pakistan lags behind regional peers such as India (17pc) and Bangladesh (12pc).

OICCI recommends that Pakistan’s tax reform agenda be guided by clear outcome targets and disciplined sequencing. It proposes raising the tax-to-GDP ratio from the current 10-12pc range to around 13pc in the short term and above 15pc in the medium term to support growth, strengthen fiscal stability and reduce reliance on debt.

Among its key recommendations, the report calls for immediate operationalisation of the Tax Policy Office as a gatekeeper for all tax changes, along with a clear separation of tax policy from the Federal Board of Revenue (FBR)’s administrative functions.

It also proposes freezing all preferential treatments, removing arbitrary forms of taxation to minimise refund issues, implementing a structured refund clearance plan, starting with refund-heavy sectors, and adopting a consultative approach in designing and reviewing tax regimes.

The report also recommends eliminating the super tax under Sections 4B and 4C, reducing the corporate tax rate to 28pc, cutting withholding taxes to 5pc and fixing the maximum salary tax slab at 25pc.

Published in Dawn, February 22nd, 2026