Karachi, May 12, 2024 – Foreign investors operating in Pakistan have issued a fervent plea to authorities to eliminate the super tax as part of the budget for the fiscal year 2024-25.
Through their representative body, the Overseas Investors Chamber of Commerce and Industry (OICCI), foreign investors have presented proposals aimed at bolstering investor confidence and stimulating economic growth in Pakistan.
The demand for the elimination of the super tax, levied under Section 4C of the Income Tax Ordinance, 2001, underscores the concerns of foreign investors regarding the tax burden imposed on compliant taxpayers. Foreign investors argue that the imposition and continuation of the super tax disproportionately affect a relatively small number of compliant taxpayers who contribute significantly to the country’s tax revenues.
“The super tax continues to add to the burden on compliant taxpayers, making Pakistan less competitive in the region,” stated representatives of foreign investors. “Therefore, we strongly advocate for the abolition or at least planned phase-out of the super tax imposed under Section 4C.”
Foreign investors emphasize that the removal of the super tax is crucial to alleviate the burden on compliant taxpayers and foster investor confidence in Pakistan’s business environment. They assert that eliminating the super tax will send a positive signal to investors and businesses, ultimately promoting economic growth and development in the country.
In addition to advocating for the elimination of the super tax, foreign investors recommend maintaining the current corporate tax rate at 29% without any further increases in the effective tax rate. They argue that the prevailing tax rate already exceeds regional competitive rates and any additional tax burden could hinder business growth and investment.
It is pertinent to note that in the Finance Act of 2019, the government proposed a gradual reduction of the Corporate Tax Rate (CTR) by 1% to 25%. However, foreign investors are urging for the preservation of the status quo to provide stability and certainty amidst challenging economic circumstances.
As discussions on the budget for the fiscal year 2024-25 unfold, the demands of foreign investors are expected to draw attention from policymakers and stakeholders, as they weigh the implications of tax policies on investment attractiveness and economic competitiveness.