Karachi, May 27, 2025 – The Site Association of Industry (SAI) has submitted detailed tax proposals for the upcoming Federal Budget 2025–26, calling for sweeping reforms to support industrial growth, broaden the tax base, and promote export competitiveness.
In its budget recommendations, SAI President Ahmed Azeem Alvi and Taxation Committee Chairman Riaz Uddin urged the government to treat the budget not merely as a fiscal exercise but as a strategic economic tool. The SAI emphasized the separation of tax policy and tax administration to eliminate conflicts of interest, proposing a model where the Ministry of Finance handles policy while an independent commission oversees revenue sharing.
The SAI strongly criticized the current narrow tax base, which it stated is limited to just 9–10% of GDP, placing an unfair burden on the formal industrial sector. The association proposed widening the tax net to include untaxed segments while capping business income tax at 25% for the next three years. It also demanded the abolition of the Super Tax and relief on dividend taxes.
Regarding recent changes to the Income Tax Ordinance through Ordinance IV of 2025, SAI expressed serious concern. The amendments, particularly Sections 138(3A), 140(6A), and 175C, were described as overreaching and unconstitutional. SAI warned that these could damage investor confidence and encourage non-compliance.
On sales tax, SAI recommended harmonizing GST across federal and provincial levels via a unified compliance portal. It proposed faster refund mechanisms, urging that Refund Payment Orders (RPOs) be issued within five days. SAI also advocated reducing the overall sales tax rate from the current 22% to 15% over three years in the budget to encourage formalization and reduce business costs.
The SAI also demanded the restoration of zero-rating for export-related goods and educational stationery, citing the Finance Minister’s budget commitments from 2024. It urged targeted 5% sales tax on essential items and called for eliminating additional sales taxes that hinder formal sector growth. SAI also pushed for removing regional sales tax exemptions, including in FATA and PATA, to ensure national tax uniformity.
In customs reforms, SAI highlighted the need to modernize outdated laws and combat under-invoicing. It called for port-of-entry revenue collection and simplification of tariffs in the FY26 budget.
On welfare schemes, SAI criticized current structures as outdated and suggested creating a unified digital platform for programs like EOBI and SESSI. The FY26 budget, SAI insisted, must balance revenue generation with industrial and social development.
SAI’s proposals reflect a clear message: the FY26 budget must prioritize sustainable economic growth while making Pakistan’s industries more globally competitive.