By Moaaz Manzoor

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed a series of tax reforms for the federal budget FY2026-27 aimed at strengthening Pakistan’s export sector, including the continuation of the 0.25% tax rate on IT exports and restoration of the Final Tax Regime (FTR) for exporters.

According to the FPCCI budget proposals document available with Wealth Pakistan, the business body believes that easing the tax burden and simplifying compliance procedures can help improve export competitiveness and support long-term growth in key sectors.

The proposals state that Pakistan’s IT and IT-enabled services exports currently stand at around $3.8 billion and possess the potential to expand to $10 billion in the coming years. To facilitate this growth, FPCCI has recommended maintaining the existing 0.25% tax rate on IT export revenues until 2035 to provide long-term policy stability for the sector.

The organization noted that frequent changes in tax policies create uncertainty for businesses and investors, particularly in sectors such as information technology where long-term planning and investment decisions are critical.

FPCCI also called for reinstating the Final Tax Regime for exporters of goods as a full and final tax liability mechanism.

According to the document, the withdrawal of FTR for exporters increased compliance requirements, documentation obligations, and tax-related uncertainty while also increasing audit-related challenges for businesses. The chamber stated that restoring the mechanism could help reduce the administrative burden on exporters.

The proposals further suggest providing exporters with the option to choose between the Final Tax Regime and the Normal Tax Regime according to their business requirements.

FPCCI maintained that a flexible approach would allow businesses to select the tax structure most suitable for their operational models while supporting export growth.

The organization also proposed introducing a simplified turnover-based taxation mechanism for SME exporters to reduce compliance costs and encourage documentation.

Under the proposed structure, SME exporters with turnover up to Rs500 million would pay a 1% tax on turnover, while higher slabs would carry slightly increased rates.

According to FPCCI, simplified tax structures can reduce disputes and litigation while making tax obligations more predictable for businesses.

The chamber emphasized that improving export competitiveness remains important for strengthening foreign exchange earnings and supporting broader economic growth.

The document states that the proposed measures seek to create a more business-friendly environment by aligning taxation policies with export development objectives and reducing barriers affecting exporters across different sectors.

Credit: INP-WealthPk