Panel proposes corporate tax cut, refund in 72 hours

Express Tribune

2 days ago

At high tax rates, profit margins for sellers decrease, leaving them with options to pass on the burden to consumers, compromise on the quality of products, evade taxes or find cheaper illicit goods. photo: file
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The Industrial Policy Committees have proposed cutting the corporate tax rate and introducing a 72-hour sales tax refund system.
In a high-level meeting held under Pakistan's Industrial Policy framework, the sub-committees on tax rationalisation and export enhancement recommended reforms to attract investment and strengthen exports. The meeting was chaired by Special Assistant to the Prime Minister (SAPM) on Industries and Production, Haroon Akhtar Khan, and attended by the PM's Coordinator Rana Ehsan Afzal, Federal Board of Revenue (FBR) officials, and other key stakeholders.
One of the main recommendations was to gradually reduce the corporate income tax rate from 29% to 26% over three years. Akhtar Khan noted that Pakistan's corporate tax remains higher than many regional peers, like Vietnam, where it is capped at 17%. He said lowering taxes would improve business outcomes and fuel economic growth.
Another major proposal was to rationalise the super tax regime. The committees suggested applying the super tax only on additional income rather than total profits. They proposed reducing the rate to 5% over five years, with possible elimination in the sixth year — conditional on a positive primary fiscal balance.
To boost exports, the committees supported introducing a new Drawback of Local Taxes and Levies (DLTL) scheme. They also backed timely disbursement of sales and income tax refunds, with a proposal for issuing refunds within 72 hours through a dedicated monitoring system. They further recommended removing cross-subsidies in industrial power tariffs and eliminating advance taxes on exporters.
The committees reviewed financial support options for exporters. Suggestions included simplifying banking procedures and offering export financing at rates 500 basis points below the current policy rate.
Addressing participants, the SAPM reaffirmed the government's commitment to making exports a national priority. He conveyed Prime Minister Shehbaz Sharif's directive to place export-led growth at the core of economic policy. Akhtar Khan acknowledged exporters' challenges, including high interest rates, costly utilities, and heavy taxes. He said strong incentives and sound policies can help local industries compete globally and ensure sustainable progress.