Karachi, April 18, 2025 – The Federal Board of Revenue (FBR) has been strongly advised to incorporate exporters into the regular income tax regime, in a move aimed at strengthening tax collection, broadening the tax base, and promoting equity in the national tax system.
The recommendation comes from the Institute of Cost and Management Accountants of Pakistan (ICMAP), which has submitted its budget proposals for the upcoming fiscal year. According to the ICMAP, the FBR should focus on gradually shifting exporters—both individuals and corporations—into the standard corporate and personal income tax structure rather than continuing to rely on fixed or final tax regimes that often result in under-taxation.
The ICMAP emphasized that streamlining tax collection from exporters would help rectify the existing imbalance, where this high-revenue sector enjoys preferential treatment. “Exporters form a vital part of the economy, and including them in the regular income tax system is necessary to ensure fairness and long-term sustainability of fiscal policies,” the proposal noted.
The institute also recommended overhauling the Personal Income Tax (PIT) system by reducing the number of tax slabs to five and increasing the maximum tax rate for non-salary individuals (NSIs) to 45%. This measure, it stated, would help the FBR capture a more accurate share of income from high-earning individuals, especially in the private and business sectors.
According to the ICMAP, Pakistan’s income distribution is significantly skewed, with the wealthiest 10% controlling over 30% of national assets. Imposing higher tax rates on affluent non-salaried individuals and exporters can help reduce income inequality and generate additional fiscal space for development spending.
The proposed 45% tax rate is designed to target only the top earners and large businesses, including high-profit exporters, without discouraging investment or growth. The ICMAP estimates that by including exporters in the regular tax framework and enforcing higher taxation on the wealthy, the FBR could increase the tax-to-GDP ratio by 0.5% to 0.7% over the next few years.
The FBR is expected to review these proposals in its upcoming budget meetings as part of its broader reform agenda.