Pakistan Faces Pressure For Structural Tax Reforms Ahead Of Budget FY27: Report

(MENAFN- IANS) New Delhi, May 10 (IANS) As Pakistan prepares for the national budget for fiscal year 2026-27, business chambers and industry stakeholders are once again pushing for structural tax reforms, arguing that the country can no longer rely on short-term taxation measures and annual fiscal adjustments to revive economic growth and investor confidence, a report has said.

Among the key voices is the Overseas Investors Chamber of Commerce and Industry (OICCI), which has submitted a fresh set of taxation proposals aimed at broadening the tax base, improving digitisation and creating a more predictable investment climate, as per Business Recorder report.

The debate comes at a time when Pakistan is grappling with fiscal stress, weak industrial competitiveness, slowing investment activity and declining investor confidence, the report said.

Business groups have argued that successive governments have largely prioritised short-term revenue collection over long-term economic restructuring, leaving major weaknesses in the tax system unresolved.

According to the proposals submitted by OICCI, sustainable revenue growth cannot come from repeatedly imposing higher taxes on the already documented sectors of the economy.

Instead, the chamber has called for expanding the tax net horizontally, simplifying compliance procedures and integrating taxation with the country's growing digital economy.

The OICCI represents more than 196 foreign-invested companies from over 30 countries, with cumulative investments exceeding $209 billion in Pakistan.

Member companies of the chamber also contribute a significant share of the government's tax revenues.

Business stakeholders have highlighted that Pakistan continues to operate with one of the narrowest tax bases in the region, while documented businesses face rising compliance costs and regulatory burdens.

This imbalance, they argue, has created an environment where tax compliance often becomes a disadvantage compared to operating informally.

The chamber has placed strong emphasis on digitisation as a key solution to improve revenue collection and documentation.

It has recommended wider use of electronic payments, e-invoicing, transaction traceability and data-linked compliance systems to reduce undocumented economic activity without relying excessively on punitive taxation, the report stated.

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