Karachi, March 16, 2026 – The Institute of Cost and Management Accountants of Pakistan (ICMA) has submitted new tax revenue generation measures to the Tax Policy Office (TPO), Ministry of Finance, for consideration in the Federal Budget 2026–27. These proposals, developed by ICMA’s Research and Publications Department, are based on careful analysis of Pakistan’s economic priorities, sectoral challenges, and international best practices. They aim to broaden the tax base, formalize emerging sectors, enhance transparency, and generate equitable and sustainable revenue streams.
The proposals, submitted by ICMA to TPO, are organized under seven key segments: (1) New Revenue Initiatives to Broaden the Tax Base, (2) Climate and Green Taxation, (3) Urban and Transport Revenue Measures, (4) Corporate and Financial Services Revenue, (5) Formalizing Digital and Informal Economy for Tax Revenue, (6) Agriculture and Rural Income Revenue, and (7) Wealth and Luxury Tax Revenue. This press release covers the first three segments, with the remaining proposals to be issued later.
ICMA has a strong record of influencing national tax policy. Several proposals from the previous year budget proposals were incorporated in the Federal Budget FY2025-26, including the withholding tax on high-value pensions, in line with ICMA’s recommendation to tax affluent pensioners while protecting low- and middle-income retirees. Other initiatives adopted included bringing digital content creators, including YouTubers and freelancers, into the tax net, formalizing emerging economic activity, and promoting fiscal fairness.
New Revenue Initiatives to Broaden the Tax Base
ICMA proposes a Digital Services Tax to capture revenues from Pakistan’s rapidly growing digital economy, including streaming platforms, gaming, mobile applications, and other digital media platforms. This measure would formalize digital business activities, ensure equitable contribution to public revenue, and strengthen fiscal resources. The expected impact is to encourage compliance, formalization of the digital sector, and alignment with international best practices.
A regulated licensing and taxation framework for online and speculative gaming is also proposed. Currently, such gaming activity is largely unregulated and accessed via offshore platforms. ICMA recommends that only licensed operators should be allowed to function under government oversight, paying a 2 percent tax on gross revenues. This measure will convert informal and illegal activity into a legally monitored and taxed sector, protect consumers, and create a stable revenue source.
To leverage corporate visibility and turnover, ICMA recommends a dedicated levy on corporate advertising and brand promotion spending, applicable to enterprises with turnover above PKR 100 million. By using existing invoices maintained by advertising agencies, this approach ensures minimal administrative burden. The expected impact is increased transparency, equitable contribution from large enterprises, and additional revenue for public programs.
The Additional Residential Property Tax (ARPS) targets second homes or investment properties valued at PKR 20 million and above. First-time buyers and primary residences remain fully exempt. Buyers will declare ownership of other residential properties at the time of registration. This tax discourages speculative property purchases, promotes efficient use of housing stock, and enhances housing equity.
ICMA also recommends the nationwide adoption of Building Information Modelling (BIM) to streamline planning, approvals, and monitoring of infrastructure projects, both public and private. By digitizing project management, BIM improves efficiency, reduces delays, and increases transparency in construction projects.
Green Building Incentives are proposed to promote energy efficiency and water conservation. Certified green buildings would receive a 1.5 percent concessionary tax on financing costs and rental income, encouraging sustainable construction practices. Expected impact includes reduced operating costs, increased investor interest, and stimulation of green construction activities.
To improve commercial building safety, ICMA recommends a Commercial Building Safety Levy (BSL) of 0.25 percent on commercial property transactions, excluding residential properties. Revenue will fund safety inspections and regulatory compliance programs, enhancing overall building safety.
For long-standing tax disputes, ICMA proposes a one-time settlement scheme, allowing taxpayers to resolve disputes by paying a reduced percentage of the disputed amount. This provides a final resolution, encourages voluntary compliance, and frees FBR resources for active enforcement.
A Financial Transaction Tax (FTT) on equities, derivatives, and digital asset trades is recommended to generate revenue from financial markets while leveraging existing reporting infrastructure to minimize compliance costs. Expected impact includes a scalable revenue source, improved market transparency, and formalization of financial transactions.
The National Consumer Receipt Lottery is proposed to encourage the formal documentation of retail sales. Consumers who obtain verified receipts will have a chance to win periodic cash prizes. This measure will strengthen voluntary compliance, formalize retail activity, and create a predictable revenue stream.
Finally, the Windfall Gains Tax targets extraordinary profits in sugar, oil & gas, and fertilizer sectors during periods of global price surges. This temporary levy ensures that the public benefits from exceptional gains by companies without affecting their normal profits. Revenues will be transparent, professionally audited, and used for public programs.
Climate and Green Taxation
To promote sustainable development, ICMA proposes property tax relief for EV charging operators, providing an 80 percent reduction for the first five years and 50 percent for the next five years. This encourages private investment in grid-compliant public and commercial EV charging stations, expands electricity consumption, and supports Pakistan’s climate and EV adoption targets.
A Landfill Disposal Tax is recommended to reduce municipal and industrial waste dumping while generating green revenue. Rates are proposed at PKR 15,000 per tonne for general non-hazardous landfill waste and PKR 1,000 per tonne for inert or partially treated waste. Expected impact includes promoting recycling, stimulating investment in waste management, and reducing landfill pressure.
ICMA also proposes a Progressive Carbon and Pollution Levy (PCPL) for large industrial units, where higher-emitting industries pay proportionally more. Revenue generated will fund environmental protection, pollution mitigation, and public health initiatives. The measure encourages cleaner production and low-carbon technologies, and supports sustainable industrial growth.
The Green Transport Levy (GTL) of 2 percent on fuel purchases, high-emission vehicle registration, and transport-related emissions is proposed to fund low-carbon mobility, incentivize cleaner vehicles and fuels, and generate dedicated funding for green transport projects.
To formalize carbon markets, ICMA recommends a Carbon Market Levy for businesses participating in carbon trading or offset programs. Administration would be coordinated by the Environmental Protection Agency and registered trading platforms. Expected impact includes transparent and accountable carbon trading, predictable revenue generation, and alignment with international sustainability practices.
Urban and Transport Revenue Measures
ICMA recommends an Annual Vacant Urban Land Tax, targeting undeveloped or long-term vacant urban plots. Identification will leverage municipal property records and digital mapping tools. Higher rates will be applied to prime urban locations to encourage productive land use. The expected impact is reduced speculative holdings, increased municipal revenue, and more efficient urban planning.
A One-Time Betterment Levy (BTL) is proposed on incremental land value gains from state-funded infrastructure projects, ensuring that landowners share a portion of the economic benefits derived from public investment. Expected impact includes fairer distribution of public infrastructure gains and funding for further development projects.
Finally, a Distance-Based Urban Road Usage Fee is recommended to account for road use, particularly by electric vehicles that do not contribute via fuel taxes. Pilots in major cities will refine implementation. Expected impact includes fair contribution from road users, stable funding for maintenance, reduced congestion, and support for urban planning.
