ISLAMABAD: Pakistan has kicked off consultations with investors and business community as it seeks to broaden its narrow tax base in the upcoming federal budget, a move that would likely see the government taxing incomes from agriculture, retail, real estate, information technology (IT) and export sectors.
The development comes a day after the International Monetary Fund (IMF) said that Pakistan’s next budget would focus on broadening the country’s narrow tax base under the third review of its $7 billion loan program.
Pakistan collected a provisional Rs11.735 trillion ($41.9 billion) in taxes during the fiscal year 2024–25, recording a 26 percent increase over the previous year’s collection of Rs9.3 trillion ($33.2 billion). However, this figure fell short of the annual target of Rs12.3 trillion ($43.9 billion).
State Minister for Finance Bilal Azhar Kayani on Sunday met the Overseas Investors Chamber of Commerce and Industry (OICCI) leadership in Karachi as part of the government’s ongoing consultations for the Federal Budget 2026–27.
“The discussion focused on the overall economic outlook, the upcoming budget, and the government’s efforts to promote business activity, improve the investment climate, and broaden the tax base,” the finance ministry said in a statement.
“Representatives of OICCI shared a range of proposals and recommendations, reflecting the perspective of foreign investors operating in Pakistan, particularly on tax policy, ease of doing business, and measures to support sustainable economic growth.”
Kayani appreciated the input and reaffirmed the government’s commitment to an “inclusive and consultative budget-making process.”
Pakistan has around 10 percent tax-to-GDP ratio, which is considered the lowest in the world, according to analysts. The country of more than 240 million people is expected to have 15 percent tax-to-GDP ratio.
The IMF, under its reforms-oriented loan program, requires Pakistan to increase its revenues by withdrawing fuel subsidies and taxing incomes from sectors that remain outside the tax next.
Separately on Sunday, Kayani engaged with the business community in Karachi, the country’s financial capital, to streamline tax reforms, according to his ministry. The meeting aimed to foster collaboration, address concerns, and incorporate feedback from stakeholders into the upcoming budget.
“Our objective is to introduce a simplified, transparent, and user-friendly taxation system that respects the ground realities of the business community,” he was quoted as saying at the meeting held at the Federal Board of Revenue (FBR) Tax Office.
“We aim to design a process that eliminates the need for complex consultancy and empowers taxpayers through a straightforward, one-page declaration format.”
The minister highlighted the government’s efforts to ensure policy continuity, emphasizing that long-term fiscal strategies are being formulated to promote growth.
“The government is actively working to increase direct tax collection while gradually reducing the burden of indirect and withholding taxes to facilitate ease of doing business,” he said, inviting the business community to submit comprehensive written proposals for the upcoming budget.
