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KARACHI, Mar 19 (APP):Pakistan Business Forum (PBF), Wednesday, submitted budget proposals for 2025-26 to the Ministry of Finance suggesting expansion of tax base, rationalizing tax rates, promoting competitiveness, and providing incentives to different sectors to rejuvenate the national economy.
The budget proposals presented by the President Pakistan Business Forum (PBF), Khawaja Mahboob ur Rehman, encompassed providing a level playing field for domestic manufacturing, promoting industrialization, agriculture, growth and job creation, improving competitiveness, reducing the cost of doing business and SME growth.
The PBF has also proposed a reduction in the advance tax slabs for filers, abolishing sales tax on domestic cotton, introducing fixed tax on traders, and allocation of the funds for development of Southern Baluchistan.
The PBF, in the budget proposals, suggested a 7 year tax exemption for mining mineral sectors under SIFC and lease companies involved in the Green Pakistan Initiative, reducing the annual minimum tax for industries to 0.25% and providing facilities for the construction sector in the budget to stimulate economic growth.
In this regard, they proposed the cancellation of Section 7E in the Income Tax Ordinance and reducing the withholding tax to 1% for first-time homebuyers. Furthermore, they suggested an amendment to Section 8B to allow the manufacturing sector to engage in exports.
The Pakistan Business Forum also demanded that the income tax rate for companies be set at 25% annually and revisiting the super tax in the budget.
The Forum recommended implementing a fixed tax on traders to increase the tax base, suggesting a tax of PKR 20,000 per month for large traders and PKR 10,000 per month for small traders.
Additionally, they recommended that income tax and sales tax audits be conducted once every four years and suggested an amendment to SRO 250-2019 to promote business activities.
The Forum also proposed a reduction in corporate tax rates to align with the private sector in neighboring countries and the removal of the tax exemptions granted to industries in FATA and PATA from the budget.
Taxes should be simple, predictable and supportive of business growth, formalization of the economy and broadening of the tax base while wealth creation through fair means should be encouraged, not penalized, the PBF proposed.
Industry, which presently contributes taxes disproportionate to its share of GDP, must be facilitated to create more jobs, boost value-added exports and promote sensible import substitution.
Provinces have little incentive to check smuggling as customs duty and GST evaded are federal taxes and do not directly hurt their revenues, the PBF noted and suggested that provinces may be incentivized to facilitate raids on shops that deal in smuggled goods.
President Khawaja Mehboob ur Rehman said PBF’s recommendations for Budget 2025– 26 have been prepared in the backdrop of challenges faced by Pakistan’s economy, high energy rates, weaker currency, closure of many manufacturing units and unemployment.
The Forum termed the current economic environment as an opportunity to bring about the major structural changes including increasing the tax base, reducing government expenditures and ensuring that general subsidies currently being offered are targeted towards those who need them the most.
This year’s tax proposals look to save jobs in the manufacturing and formal services sectors and to lay the groundwork for a sustained economic recovery driven not by imports but by exports and domestic manufacturing with strong and robust agriculture.