ICMA proposes new taxes on digital services, gaming, second homes for Budget 2026-27

The Institute of Cost and Management Accountants of Pakistan (ICMA) has proposed a series of new taxes for the Budget 2026-27, targeting digital services, online gaming, corporate advertising and second-home ownership to broaden the tax base.

The proposals, submitted to the Ministry of Finance’s Tax Policy Office, aim to increase revenue by bringing emerging and under-documented sectors into the formal tax system.

ICMA has recommended introducing a Digital Services Tax on activities such as streaming platforms, mobile applications, gaming and other digital services to capture revenue from the expanding digital economy.

It also proposed a regulatory framework for online and speculative gaming, suggesting that only licensed operators be allowed to operate under government oversight, with a 2% tax on gross revenues.

To increase contributions from large businesses, the body suggested a levy on corporate advertising and brand promotion spending for companies with turnover above Rs100 million.

In the real estate sector, ICMA proposed an Additional Residential Property Tax on second homes or investment properties valued at Rs20 million and above, while exempting primary residences.

The recommendations also include a Financial Transaction Tax on equities, derivatives and digital asset trades, as well as a National Consumer Receipt Lottery to promote documentation of retail sales.

To address sectoral windfalls, ICMA proposed a temporary tax on extraordinary profits in industries such as sugar, oil and gas, and fertiliser during periods of global price increases.

In the area of dispute resolution, the body suggested a one-time settlement scheme to allow taxpayers to resolve pending cases by paying a reduced amount.

The proposals also cover environmental taxation, including a progressive carbon and pollution levy for large industrial units and a landfill disposal tax to reduce waste.

ICMA further proposed incentives for green buildings and tax relief for electric vehicle charging infrastructure, alongside a green transport levy on fuel use and high-emission vehicles.

The recommendations are part of a broader framework covering revenue expansion, climate taxation, urban development, financial markets and formalisation of the informal economy.