OICCI Criticises Budget for Missing Tax Reforms, Warns of Lost Investment Potential

The Overseas Investors Chamber of Commerce and Industry (OICCI) has voiced disappointment over the government’s limited progress in restructuring corporate taxation in the latest budget, warning that the continued inequity in tax rates could deter much-needed foreign investment.

While the Chamber acknowledged a marginal reduction in Super Tax rates, it stressed that these changes fall short of the structural reforms required to improve Pakistan’s investment climate. OICCI has long advocated for a comprehensive overhaul to make the country more competitive regionally.

The Chamber also criticised the lack of substantial cuts to government spending, noting that without fiscal discipline, macroeconomic stability remains fragile. It urged policymakers to prioritise rationalisation of expenditure to help reduce the widening budget deficit.

OICCI described the absence of a strategy to document the estimated Rs9 trillion informal cash economy as a missed opportunity. “Broadening the tax base through formalising undocumented sectors is essential for sustainable revenue growth,” it noted, reiterating a long-standing recommendation.

Several positive measures were welcomed, including simplified tax returns for salaried workers and small businesses, a nationwide e-invoicing rollout, and wider use of POS systems. However, OICCI cautioned that these initiatives will only yield results if implemented transparently and consistently.

The Chamber praised the increase in the personal income tax exemption threshold and reduction in tax rates for salaried individuals, saying it aligned with its proposals. However, it warned that the changes do not go far enough to address the country’s brain drain.

OICCI also supported the government’s gradual withdrawal of tax exemptions in FATA and PATA and tighter enforcement against non-compliant taxpayers, including restrictions on asset transfers and property purchases.

Nonetheless, the Chamber concluded that the budget fails to deliver meaningful reforms for the corporate sector. It called for rationalised tax brackets and a reduced overall burden on businesses to foster a more welcoming investment environment.