In a bid to attract investment and boost exports, the Industrial Policy Committees, in a high-level meeting chaired by Special Assistant to the Prime Minister (SAPM) on Industries and Production, Haroon Akhtar Khan, proposed key reforms, including a gradual reduction in corporate tax rates and the introduction of a 72-hour sales tax refund system, with government officials and stakeholders in attendance to discuss these proposals.
A major recommendation from the committees is to lower the corporate income tax rate from 29% to 26% over three years, aligning Pakistan’s tax policy with regional competitors such as Vietnam, where the corporate tax is capped at 17%.Â
The committees also suggested rationalising the super tax regime by applying it only to additional income, with a proposal to reduce the rate to 5% over five years, potentially eliminating it after six years based on fiscal balance.
To enhance exports, the committees proposed a new Drawback of Local Taxes and Levies (DLTL) scheme and emphasized the importance of issuing sales and income tax refunds within 72 hours.Â
The plan includes setting up a dedicated monitoring system for timely disbursements. Further recommendations include eliminating cross-subsidies in industrial power tariffs and removing advance taxes on exporters.
In addition, the committees reviewed financial support options for exporters, recommending simplified banking procedures and export financing at lower interest rates.
SAPM Haroon Akhtar Khan reaffirmed the government’s commitment to prioritizing export-led growth and acknowledged the challenges faced by exporters, including high interest rates and costly utilities. He emphasized that sound policies and incentives are crucial to help local industries compete on a global scale and ensure sustained economic progress.
