Multinationals Urge Tax Refund Reforms & Rate Cuts in Pakistan

Representatives of multinational enterprises operating in Pakistan voiced significant apprehensions regarding protracted delays in tax refund disbursements, instances of alleged administrative harassment, and aggressive advance tax demands imposed by the Federal Board of Revenue (FBR). These concerns were articulated during a structured dialogue between the Overseas Investors Chamber of Commerce and Industry (OICCI)—which represents more than 200 multinational corporations—and the newly appointed Director General of the Tax Policy Office within the Finance Division.

The session, focused on systemic and policy-oriented taxation matters rather than case-specific grievances, acknowledged recent progress in macroeconomic stabilisation while underscoring the imperative for enhanced predictability, uniformity, and transparency in both tax policy formulation and its practical enforcement.

Key grievances highlighted included chronic delays in processing and issuance of tax refunds, recurrent and unpredictable policy alterations, and escalating compliance burdens that collectively erode investor confidence. Participants emphasised that persistent discrepancies between declared policy intentions and actual administrative practices continue to deter long-term foreign investment.

The OICCI delegation advocated for a phased reduction of the super tax rate from the current 10% to 6% in the forthcoming 2026–27 federal budget, with a complete phase-out envisaged over a three-year horizon. Additionally, they proposed an incremental lowering of the corporate tax rate by one percentage point each year for the next four years to bolster Pakistan’s attractiveness as an investment destination and facilitate more reliable financial planning.

The chamber further called for improved inter-institutional coordination, procedural simplification, and a genuinely consultative mechanism for tax reform initiatives to foster sustainable foreign direct investment inflows.

In a parallel engagement, the Pakistan Business Council (PBC) held discussions with the Tax Policy Office as part of the government’s broader consultation drive on tax restructuring. The PBC reiterated the critical need to segregate tax policy functions from revenue collection administration and to cultivate a stable, growth-supportive, and equitable tax regime that promotes investment, export competitiveness, and progressive formalisation of the economy while safeguarding compliant taxpayers.

Both interactions concluded with a mutual commitment to sustained, regular consultations, ensuring that industry perspectives continue to shape tax policy deliberations with the overarching goal of restoring predictability, consistency, and confidence in Pakistan’s taxation ecosystem.