Islamabad, July 4, 2025 – In a major development aimed at industry revival, the Prime Minister’s Committees on Industrial Policy have proposed a significant reduction in the corporate tax rate to 26%.
This recommendation, alongside a host of structural reforms, is expected to pave the way for the revival of Pakistan’s struggling industry sector.
The high-level meeting, chaired by Special Assistant to the Prime Minister (SAPM) on Industries and Production, Haroon Akhtar Khan, finalized recommendations from eight specialized sub-committees. These proposals form the backbone of the government’s new national industrial strategy, which seeks to breathe new life into Pakistan’s faltering industry landscape.
Haroon Akhtar Khan underscored the urgency of these measures, revealing that the industrial sector’s contribution to GDP has plummeted from 26% in 1996 to just 18% in 2025. He called this decline alarming and stressed that immediate action is essential for revival of the industry, export growth, and import substitution.
Among the key reforms suggested:
• The State Bank of Pakistan (SBP) will issue dedicated guidelines for the revival of sick industries and effective debt resolution frameworks.
• Amendments are proposed to the Corporate Rehabilitation Act 2018 to streamline insolvency and restructuring processes.
• Banks will be encouraged to use predictive data analytics to identify early signs of financial distress in industrial units.
• A comprehensive classification of industrial units has been agreed upon in collaboration with the Pakistan Banking Association.
Central to the reform package is a phased reduction of the corporate tax rate from the current 29% to 26% over three years. This step is seen as a powerful incentive to attract new investments and encourage the revival of dormant industries. Additionally, legal changes to the SECP Act, Anti-Money Laundering Act, and Income Tax Ordinance are also on the table to facilitate smoother business operations.
To fast-track implementation, 10 new sub-committees have been constituted. SAPM Khan has tasked these groups with delivering actionable outcomes within one week. He described the new industrial policy as a game changer, with the potential to spark a true industrial revival.
Prime Minister Shehbaz Sharif has reviewed and commended the recommendations, expressing full support for this ambitious industry reform agenda.