Karachi, February 17, 2025 – The Pakistan Business Council (PBC) has proposed a 1% reduction in the corporate tax rate for listed companies with a minimum float of 25% in a given year.
This recommendation is part of the PBC’s tax proposals for the 2025-26 budget, submitted to the Federal Board of Revenue (FBR). The PBC aims to encourage legitimate, competitive profit-making, wealth creation, and economic growth while expanding the tax base, generating employment, and supporting a sustainable trade balance.
The PBC emphasized that fiscal policies should be strategically employed to direct investments into future-focused sectors. The organization has suggested several key measures to achieve these objectives:
a) Listed companies maintaining a minimum float of 25% in a year should benefit from a 1% reduction in their corporate tax rate.
b) The super tax should be phased out by reducing it by 2% annually until its complete removal for non-export profits. Additionally, the super tax on export-related profits should be halved in FY26 and eliminated within three years. The PBC recommends applying the super tax progressively, with profit slabs adjusted to account for inflation.
c) New exporters who achieve a minimum export level of 15% of their annual turnover should qualify for a 1% lower corporate tax rate on the audited profits from these incremental exports.
d) Existing exporters who increase their exports by 15% compared to the previous year should benefit from a 0.5% withholding tax on export proceeds and a 1% lower corporate tax rate on profits from these additional exports.
e) Companies that reduce their reliance on direct and indirect imports by 15% compared to the prior year should receive a 1% reduction in their corporate tax rate for that year.
f) Long-term investments in listed companies should be encouraged by exempting capital gains tax on shares held for more than three years.
g) The PBC recommends promoting corporatization by exempting gains from the sale of non-listed company shares after a holding period of 10 years.
h) Since bonus shares merely redistribute existing shareholder funds without altering intrinsic value, the PBC suggests withdrawing the tax on these shares.
i) The PBC advocates for the introduction of an industrial policy that selectively supports sectors capable of achieving export competitiveness and reducing import dependence.
j) Advance taxes on cellular and fixed internet services should be rationalized to ease the financial burden on individuals earning below the taxable income threshold.
k) The PBC proposes restoring the pass-through tax treatment of income and gains derived from investments in private equity and venture capital.
The PBC believes that these measures, if implemented, will create a more competitive, growth-oriented, and inclusive economic environment for Pakistan.