By Staff Reporter
ISLAMABAD: Pakistan’s government is grappling with high corporate taxes that are deterring foreign investment, according to a top official, even as tax authorities insist any rate cuts must be paired with stricter compliance to avoid a massive revenue shortfall.
The concerns surfaced at a two-day economic dialogue organised by the Pakistan Business Council in Islamabad, where Lieutenant General Sarfraz Ahmed, national coordinator of the Special Investment Facilitation Council, a military-backed body set up to streamline investment, fielded questions from business leaders about the tax burden.
Ahmed acknowledged that Pakistan’s effective corporate tax rate can climb as high as 50%. “Who would invest in such an environment?” he said, highlighting the barrier to inflows. Still, he stressed that officials are addressing the issue. “The government is working on ways to fix it.”
However, the Federal Board of Revenue estimates that lowering rates could result in a revenue hit of as much as Rs1.6 trillion unless offset by better adherence to tax rules.
FBR Chairman Rashid Mahmood Langrial, speaking in a separate session, tied any adjustments to enhanced compliance measures. He detailed ongoing automation initiatives aimed at improving taxpayer services and plugging leaks in the system.
Langrial outlined plans to gradually eliminate the super tax and trim other rates, but reiterated that these steps depend on reforms to cushion the fiscal impact, especially for corporations. He also laid out the government’s goal of boosting the tax-to-GDP ratio to 18% by 2028, with the FBR contributing 13.85%, provinces 3%, and the balance from the Petroleum Development Levy.
Ahmed, reflecting on three years of FDI efforts, said a key takeaway is that overseas capital tends to follow domestic participation. “Let’s bring our own sectoral tycoons to the table,” he said, signaling a pivot toward pitching projects first to local entrepreneurs. “We are now going to pitch these projects to our own businessmen first, so they can take leadership,” Ahmed explained, calling on them to spearhead initiatives and demonstrate viability.
He pledged full backing. “You need help, I am the person you need to work with. I will walk with you through the entire process. I will help you — and when I say ‘I,’ I mean my organisation.” In a direct plea to the audience, Ahmed urged: “Please help us, because helping us means helping Pakistan.”
He encouraged submitting solid project proposals, promising SIFC assistance in linking with investors, funding sources and international partners. “If your project is worth attracting investment, we will facilitate you,” he said. Ahmed noted that Gulf Cooperation Council nations and Saudi Arabia have capital ready but seek guidance on local counterparts. “You have to pinpoint the exact partner we should work with. We have the money; you tell us who our partner should be,” he quoted them as saying.
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