KARACHI: The Overseas Investors Chambers of Commerce and Industry (OICCI) has proposed capping withholding tax rates at 5%, urging the government to shift its tax strategy toward broadening the tax base instead of relying on such levies for direct revenue generation.
In its detailed reform proposals, the chamber emphasised that tax policy must align with overall economic activity and be developed in coordination with federal and provincial authorities. It warned that fragmented policymaking could undermine effectiveness and weaken long-term fiscal stability.
OICCI highlighted the need to increase Pakistan’s tax-to-GDP ratio from the current 10–12% to above 15% in the medium term, stressing that sustainable fiscal growth requires reducing dependence on withholding and minimum taxes.
The chamber called for a structural transition toward return-based direct taxation and a modern value-added tax system, supported by simplified compliance procedures, faster refund mechanisms, reduced discretionary changes, and enhanced digitalisation.
It cautioned that high tax rates combined with complex systems and aggressive withholding measures could fuel tax evasion. As a solution, OICCI recommended restricting withholding taxes primarily to documentation purposes, with revenue generation driven by transparent income-based taxation.
Among key proposals, the chamber urged the elimination of super tax, reduction of corporate tax rates to 28% with a gradual roadmap to 25%, and lowering sales tax to 12%. It also recommended limiting minimum taxation to select sectors and reducing the maximum salary tax rate to 25%.
In its phased reform roadmap, OICCI proposed immediate steps such as operationalising a Tax Policy Office, freezing new tax exemptions, clearing pending refunds, and removing distortive tax measures.
Over the medium term, it advocated for a unified VAT/GST system, expansion of the tax base to include property and agriculture, and stronger coordination between federal and provincial governments.
In the long run, the chamber recommended abolishing the filer and non-filer distinction, modernising dispute resolution systems, and reforming customs to boost trade competitiveness.
OICCI concluded that Pakistan’s tax system must evolve into a simplified, digitally integrated, and growth-oriented framework with lower rates, fewer exemptions, and stronger compliance driven by automation and data sharing.
