Karachi, April 21, 2025 – The Institute of Cost and Management Accountants of Pakistan (ICMAP) has proposed a major overhaul in the country’s General Sales Tax (GST) framework, calling for the introduction of a flat GST policy specifically tailored for mid-tier businesses.
This recommendation was made as part of ICMAP’s comprehensive tax proposals for the upcoming fiscal budget 2025-26.
In its submission to the Federal Board of Revenue (FBR), ICMAP suggested that businesses with quarterly sales exceeding Rs6 million but below Rs40 million should be brought into the GST net through a simplified, uniform system. Rather than applying varying tax rates and complex procedures, ICMAP recommends a flat 1% GST on the total sales of these mid-sized enterprises.
ICMAP explained that integrating such businesses into the GST structure would not only reduce tax evasion but also ensure transparency and fairness across the supply chain. “A flat GST mechanism will capture previously untaxed or under-reported segments, expanding the tax base and creating a level playing field,” the organization noted.
The institute emphasized that the current fragmented and overly complex tax environment discourages smaller and medium enterprises from registering, further deepening informality in the economy. Simplifying compliance through a flat GST would encourage voluntary registration and improve tax collection efficiency.
ICMAP estimates that the integration of the entire business value chain into the GST framework could yield an additional PKR 10-15 billion annually in tax revenue. This projection is based on Pakistan’s tax-to-GDP ratio, the scale of the informal economy, and the anticipated rise in compliance levels due to simplification.
Moreover, ICMAP highlighted that formalizing mid-tier businesses through such a policy could contribute 0.1 to 0.2 percentage points to GDP growth. Benefits would include better business documentation, enhanced investor confidence, and improved fiscal stability.
With this proposal, ICMAP has positioned itself at the forefront of advocating for pragmatic tax reforms aimed at bridging the formal-informal divide while bolstering national revenues.