ISLAMABAD: Pakistan is considering sweeping changes to its corporate tax regime, including scrapping a controversial super tax and reducing the headline rate to around 25 percent, as it seeks to make the country more competitive for both domestic and foreign investors, including deep-pocketed funds from GCC countries, a senior official said on Thursday.
The proposals come as Pakistan remains under a $7 billion IMF program that emphasizes revenue generation and fiscal consolidation. Any reduction in corporate taxes would require careful balancing against these commitments. But officials argue that Pakistan’s effective corporate tax burden, nearing 50 percent when super tax, workforce taxes and dividend levies are combined, has made local firms uncompetitive and limited the country’s ability to attract new foreign investment, including from Gulf sovereign wealth funds that are actively exploring partnerships in Pakistan’s mining, agriculture, logistics and energy sectors.
Addressing an event organized by the Pakistan Business Council (PBC), Lt. Gen. Sarfaraz Ahmad, SIFC’s national coordinator, said Pakistan’s existing tax structure was “choking” business activity and could not continue.
