Multinational companies operating in Pakistan have raised concerns over delayed tax refunds, alleged harassment, and advance tax collection practices by the Federal Board of Revenue (FBR), during an interactive session with the newly appointed Director General of the Tax Policy Office at the Finance Division. The engagement was held with members of the Overseas Investors Chamber of Commerce and Industry (OICCI), which represents more than 200 multinational firms operating across key sectors of the economy.
According to media reports, the session was part of the government’s broader outreach to engage with the private sector on tax policy and structural reforms. Representatives of multinational companies used the platform to highlight persistent operational challenges faced under the current tax regime, despite recent signs of macroeconomic stabilisation. They stressed that unresolved tax-related issues continued to affect investment planning and long-term business decisions.
One of the central concerns raised by the chamber was the prolonged delay in the settlement of tax refunds. Members noted that liquidity constraints arising from delayed refunds adversely affect business operations, increase financing costs, and weaken Pakistan’s competitiveness as an investment destination. Participants also pointed to what they described as aggressive tax collection practices, including advance tax demands, which add to compliance burdens and uncertainty.
In addition to operational issues, the OICCI presented proposals for tax policy changes in the upcoming 2026–27 federal budget. The chamber called for a reduction in the super tax rate from the current 10 percent to 6 percent, with a recommendation to phase it out entirely over a three-year period. It also urged the government to lower the corporate income tax rate by one percentage point annually over the next four years, arguing that a predictable and gradual reduction would support competitiveness and enable better long-term investment planning.
According to an official statement, the discussion remained focused on policy-level and structural issues rather than individual tax cases. Participants acknowledged improvements in macroeconomic indicators but emphasized that stability must be complemented by consistency and transparency in tax policy and its implementation. Frequent policy changes and rising compliance costs, they said, undermine confidence even when headline economic indicators improve.
Chamber members highlighted a persistent gap between stated tax policy objectives and on-ground implementation. They noted that while official policies often emphasize investment facilitation and ease of doing business, practical execution by tax authorities does not always align with these goals. This misalignment, they argued, continues to erode investor confidence and discourages new foreign direct investment.
The OICCI also called for stronger institutional coordination within the tax administration, simplified procedures, and a more consultative approach to tax reforms. Members stressed that meaningful engagement with stakeholders at the policy design stage could help address implementation challenges and reduce uncertainty for investors operating in Pakistan.
In a separate but related engagement, the Pakistan Business Council (PBC) also met with officials of the Tax Policy Office as part of the government’s consultations on tax reforms. The PBC emphasized the importance of clearly separating tax policy formulation from revenue administration, arguing that this distinction is essential for creating a predictable and growth-oriented tax framework.
The business council reiterated that long-term consistency in tax policy is critical for supporting investment, boosting exports, and promoting economic formalisation. It also stressed the need to ensure a level playing field for compliant businesses, noting that uneven enforcement and ad hoc measures distort competition and discourage documentation.
Both engagements concluded with an understanding that regular consultations would be maintained between the government and the business community. The stated objective of these interactions is to improve predictability, consistency, and transparency in Pakistan’s tax framework, with the broader aim of restoring investor confidence and supporting sustainable economic growth.
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