Latest Updates​

Pakistan’s tax policy is entering a very important phase where the real question is not only how much revenue the government collects, but how that revenue is collected. The Tax Policy Unit’s expected role in budget proposals for 2026-27 reflects a major shift towards rationalizing taxes, supporting documented sectors, and restoring investor confidence. For too long, the formal and compliant businesses have remained the easiest target for additional taxation, while large portions of the informal economy continue to operate outside the tax net.

A sustainable tax system cannot be built by repeatedly increasing the burden on the same documented sectors. Multinational companies, large manufacturers, formal retailers, and regulated industries already contribute through income tax, sales tax, FED, withholding taxes, payroll taxes, and extensive compliance obligations. If tax policy continues to overburden these sectors, it may discourage new investment, reduce expansion, and push economic activity away from documentation.

The better approach is to broaden the tax base by gradually bringing undocumented retail, wholesale, small manufacturing, and informal supply chains into the system. Tax rationalization should not be seen as a revenue loss; if designed properly, it can increase production, improve turnover, encourage investment, and ultimately generate higher overall tax collection from a wider and fairer base.