The Government of Pakistan has decided to formally approach the International Monetary Fund (IMF) to request flexibility on the super tax imposed on major industries. This move comes amid growing concerns from the business community over the heavy tax burden, which they warn could drive investment out of the country, especially to the UAE.
According to Federal Board of Revenue (FBR) sources, the super tax was introduced in 2022 to protect low-income groups from additional tax pressure. It targeted large-scale industries, including cement, steel, sugar, oil and gas, and LNG terminals. The additional 10% tax increased the effective tax rate on these sectors to nearly 39%, one of the highest in the region.
The FBR is concerned that, without relief, this tax could further stall private sector growth and harm Pakistan’s industrial output. Business leaders have already flagged the risk of relocation, citing Dubai’s investor-friendly tax policies. Furthermore, around Rs200 billion in super tax-related cases are currently under litigation in courts, reflecting the scale of discontent within the corporate sector.
Officials also highlighted that Pakistan’s tax-to-GDP ratio has improved, growing from 8.8% to 10.4% in recent months. The government hopes to hit 10.6% by the end of June 2025 and has set an ambitious target of 11% for the next fiscal year. This increase will come through better tax enforcement and reforms rather than further burdening existing taxpayers.
The outcome of negotiations with the IMF will be crucial not only for the upcoming budget but also for the country’s broader economic stability. Experts believe that a balanced approach to taxation and investment incentives will be key to sustaining long-term growth.