KARACHI: Pakistan’s business policy advocacy group urged the government to rationalize corporate tax rates during talks with an International Monetary Fund (IMF) delegation on Saturday, arguing such a step would be critical to shifting the economy from stabilization to export-led growth.
The Pakistan Business Council (PBC), which represents many of the country’s largest private-sector companies, said the current tax structure places a disproportionate burden on documented and compliant enterprises.
The engagement follows the arrival of an IMF staff mission in Pakistan earlier this week to begin review talks that will determine the release of the next tranche under the country’s $7 billion Extended Fund Facility (EFF) and the $1.4 billion Resilience and Sustainability Facility (RSF).
The team is expected to start formal negotiations next week, discussions seen as critical to sustaining Pakistan’s fragile economic recovery and maintaining external financing stability.
“Stabilization has provided breathing space,” PBC Chairperson Dr. Zeelaf Munir said according to a statement after the meeting with the IMF delegation headed by mission chief Iva Petrova. “The priority now is institutionalizing growth.”
“A competitive and equitable tax framework, predictable energy pricing and policy consistency are essential to expand exports, attract investment and generate employment at scale,” she continued. “The private sector stands ready to deploy capital where reform signals remain clear and credible.”
In its presentation to the Fund team, the PBC called for the abolition of the super tax, an additional levy imposed in recent years on high-earning companies and individuals to shore up revenues, in all its forms. It also demanded a phased reduction of the corporate tax rate to 25%, and rationalization of advance and withholding tax regimes that businesses say function as de facto minimum taxes.
The PBC urged the broadening of the tax base through stronger enforcement to bring untaxed sectors into the net, rather than increasing the burden on existing taxpayers.
Prime Minister Shehbaz Sharif said earlier this week on Wednesday the government was considering reducing direct taxes in the upcoming federal budget to support businesses, while maintaining that indirect taxes collected from consumers must be properly deposited into the national exchequer.
The IMF review discussions with the Pakistani authorities are expected to focus on fiscal consolidation, monetary policy, structural reforms and climate-related benchmarks tied to the RSF program, as Islamabad seeks to secure continued external financing and strengthen macroeconomic stability.
