Karachi, March 19, 2026 – The Institute of Cost and Management Accountants of Pakistan (ICMA) has submitted a comprehensive set of revenue proposals to the Tax Policy Office at the Ministry of Finance for the upcoming Federal Budget 2026–27. Prepared by ICMA’s Research and Publications Department, these recommendations aim to bring undocumented sectors into the tax net, target untapped revenue streams, and create sustainable income for the national exchequer. Following earlier proposals on new revenue initiatives, climate taxation, and urban transport, this release presents the remaining high-priority measures sequenced by revenue impact.
1) Up to PKR 150 billion from Luxury and Excise Taxes – ICMA proposes expanding Federal Excise Duty to raise PKR 120–150 billion from luxury and harmful products. Rates include 5–7% on mineral oil and high-end electricity, 10–15% on tobacco, 20–25% on imported and local alcoholic beverages, a progressive 5–10% excise on luxury vehicles at registration, 10% on sugar-sweetened beverages, and 15% on e-cigarettes and e-liquids. This targets high-income users, discourages harmful consumption, ensures easy administration, and promotes documentation. Expected contributions: tobacco PKR 40–50 billion, luxury vehicles PKR 25–30 billion, high-end energy PKR 30–40 billion, sugary drinks PKR 15–20 billion.
2) Tax on High-Value Gifts and Inheritances – ICMA recommends a Capital Acquisitions Tax for gifts and inheritances where either the donor or beneficiary is a Pakistan tax resident or the asset is located in Pakistan. Direct heirs (children/spouses) have a PKR 50 million exemption, close relatives PKR 10 million, and others PKR 5 million, with progressive rates applied on excess. This captures high-value wealth transfers, improves equity, formalizes assets, and aligns Pakistan with international norms.
3) PKR 2,000 Monthly Tax Scheme for Small Entrepreneurs with Health Coverage – The Simplified Micro-Entrepreneur Regime targets businesses with turnover up to PKR 5 million. A fixed monthly tax of PKR 2,000 covers income tax and minimum social security contributions, with access to health insurance and pensions contingent on compliance. Simplified digital registration, minimal documentation, and quarterly filings encourage formalization, expand the tax base, and ensure predictable revenue.
4) Tax Incentives to Attract Global Trading Businesses – The Global Export Incentive Scheme offers reduced corporate tax rates of 5–10% for commodity traders, brokers, and supply-chain managers establishing operations in Pakistan with minimum local employment and substance. This measure promotes exports, attracts multinational firms, enhances foreign exchange inflows, and strengthens formal trade compliance.
5) Tax Incentives for Fintech and Digital Finance – A Financial Sector Incentive Scheme is proposed for licensed fintech companies, including cryptocurrency and blockchain-based services, offering 10–15% concessionary corporate tax rates. It encourages formalization, transparency, fintech innovation, reduces informal economy risks, and generates PKR 5–10 billion in new taxable activity over five years.
6) Government-Backed Farmer Savings Scheme – The Farmer Income Stability Fund allows registered farmers to deposit up to 3% of net agricultural income, with matching government contributions and annual bonuses. The fund integrates crop/weather insurance, price support, credit access, digital marketplaces, and incentives for climate-smart practices. Expected impacts include boosting investment in inputs and technology, reducing income volatility, expanding participation in formal financial systems, and formalizing agricultural income.
7) Simplified License for Small Traders – Modeled on Tanzania’s Nguvu Kazi program, the Simplified Micro-Trader License offers presumptive taxation, simplified digital registration, and easy returns for small traders and self-employed individuals. It encourages voluntary registration, broadens the tax base, and reduces administrative burden.
8) Fair Tax on Corporate Service Providers – A Progressive Corporate Services Tax of 7% is proposed on gross revenues of exempted entities, starting at 0.5% for smaller firms and rising to 5% for large corporations. VAT and consumption taxes on selected products may increase up to 19%. These measures broaden the tax base, enhance compliance, improve equity, and strengthen fiscal consolidation.
9) Standardized System for Agricultural Income – ICMA proposes a Standardized Agricultural Income Assessment Framework with multiple options: bookkeeping for large farms, inventory-based valuation, flat per-acre/crop rates for smallholders, and administrative benchmarks. Mandatory record-keeping applies to large farms, while smallholders may use simplified methods. This ensures fair assessment, improves transparency, broadens the agricultural tax base, and strengthens revenue predictability.
10) Tax Incentives for Bonds and Sukuk Markets – Concessionary tax treatment and regulatory support are recommended for corporate bonds, sukuk, hybrid debt equity instruments, and structured products. These measures encourage long-term investment, reduce reliance on high-cost short-term debt, expand taxable financial transactions, increase market liquidity, and promote sustainable private sector financing.
With these comprehensive proposals, each supported by clear policy rationale and measurable expected impact, ICMA reaffirms its commitment to supporting Pakistan’s economic development. The Institute stands ready to provide technical assistance to the Ministry of Finance in crafting a Federal Budget 2026–27 that promotes transparency, equity, and sustainable growth for all Pakistanis.
