Chartered accountants propose 10-year tax stability and incentives for export-oriented foreign investors in FY2026-27 budget
The institute recommended the creation of a separate tax schedule specifically designed for foreign direct investment in export-led manufacturing sectors. Under the proposed framework, qualifying investors would receive a package of tax incentives, legal protections and clearly defined eligibility criteria aimed at encouraging long-term investment commitments.
ICAP suggested that the new regime should guarantee consistency in the income tax framework for at least 10 years from the commencement of operations of eligible industries. The institute argued that policy predictability and tax stability are among the most important factors considered by foreign investors when making long-term investment decisions.
The proposed scheme would also establish conditions to ensure that foreign investments generate broader economic benefits for Pakistan. These include a minimum investment threshold, the creation of a specified number or percentage of jobs for Pakistani nationals and mandatory transfer of technology within a defined timeframe.
ICAP further recommended incorporating supporting provisions into other relevant laws and statutes to provide comprehensive legal protection and regulatory certainty for investors.
Explaining the rationale behind the proposal, the institute noted that Pakistan’s economy requires stronger measures to attract foreign capital, particularly into sectors capable of generating exports, employment and industrial growth.
According to ICAP, increased foreign direct investment in export-oriented manufacturing industries could help boost exports, create jobs, encourage technology transfer and strengthen Pakistan’s long-term economic prospects.
The recommendations come as the government prepares to unveil the federal budget for FY2026-27 amid efforts to increase investment inflows, broaden the tax base and accelerate economic recovery.
Analysts say a stable and predictable tax framework could improve investor confidence, enhance Pakistan’s competitiveness as an investment destination and support the development of the country’s manufacturing sector.
