Karachi, February 18, 2025 – The Pakistan Business Council (PBC) has raised concerns over the high tax rates on salaried individuals, warning that these excessive rates are driving skilled professionals to seek opportunities abroad, resulting in a significant brain drain.
In its tax proposals submitted to the Federal Board of Revenue (FBR), the PBC highlighted the disproportionate tax burden faced by salaried individuals. Currently, salaried persons in Pakistan are subjected to an income tax of up to 29%, along with a 10% super tax and a 15% dividend tax. The PBC emphasized that such high taxation discourages talent retention and pushes professionals towards informal, untaxed sectors.
The PBC recommended a reduction in the tax burden on salaried employees to curb the ongoing exodus of skilled labor. It suggested revising the existing tax slabs to account for inflation, ensuring a more equitable and competitive taxation structure that aligns with global standards.
Furthermore, the PBC pointed out the challenges posed by the general sales tax (GST), which currently stands at 18%. In an economy with a large undocumented sector, this high GST rate creates a strong incentive for tax evasion. The council proposed a gradual reduction in the GST rate by 1% annually until it reaches 15%. Such a measure, the PBC argued, would enhance compliance and expand the tax base.
The PBC also raised concerns regarding the effective 48% tax rate on the corporate sector, which includes corporate income tax, super tax, and withholding taxes. This high tax burden, the council noted, renders Pakistan less attractive for both domestic and foreign investors. To foster a more investment-friendly environment, the PBC recommended gradually reducing the corporate tax rate by 1% annually until it reaches 25%, a level comparable with other emerging economies.
Additionally, the PBC advocated for the discontinuation of multiple taxation on inter-corporate dividends. The council explained that eliminating this practice would encourage corporate consolidation, promote diversification, and support the growth of the capital market by broadening the investor base.
The PBC remains committed to working with policymakers to create a fairer, more competitive tax environment that supports economic growth and retains the country’s human capital.