The government is exploring a reduction in the Corporate Tax Rate in the upcoming FY26 budget. Officials aim to provide additional tax relief in various areas to stimulate the economy. They see this potential change as an opportunity to encourage investment and boost job creation across Pakistan.
Government leaders are looking to utilize fiscal space created by falling international oil prices. Additionally, the central bank has decreased the key interest rate by 10 percentage points since June 2024. Currently, the interest rate is set at 12%. These factors provide a chance to introduce favorable tax measures for businesses.
Haroon Akhtar Khan, Special Assistant to the Prime Minister, has emphasized the importance of rationalizing Corporate Tax. He noted that past tax rates rose substantially due to the implementation of a Super Tax. The base Corporate Tax Rate has been 29%, while banks face a tax of 39%. Moving forward, Khan advocates for removing the Super Tax for banks to ease their financial burden.
Moreover, he mentioned that the government aims to support exporters with relief measures under the Export Finance Scheme. He indicated ongoing efforts to simplify business setup processes, noting the excessive certifications currently required. The government is prioritizing the development of a new industrial policy to support business growth in Pakistan.