EPBD Recommends Wide-Ranging Tax Cuts Ahead of Budget

ISLAMABAD: (Web Desk) – A leading economic think tank, Economic Policy and Business Development (EPBD), has proposed extensive tax reforms ahead of Pakistan’s federal budget for the fiscal year 2026-27, advocating substantial reductions in tax rates to stimulate economic activity and investment.

According to budget recommendations submitted to the government, EPBD has proposed lowering the maximum income tax rate for salaried individuals from 35 percent to 20 percent. The think tank also suggested reducing the corporate tax rate from 29 percent to 25 percent to enhance business competitiveness and encourage investment.

For non-salaried taxpayers, EPBD recommended a significant reduction in the tax rate from 45 percent to 25 percent. The organization further proposed a complete income tax exemption for individuals earning up to Rs80,000 per month.

The think tank also called for a gradual reduction in the general sales tax rate from 18 percent to 15 percent over the next three years. At the same time, it urged the government to broaden the tax base by bringing retailers, traders and vendors into the formal taxation framework.

In the real estate sector, EPBD recommended reducing taxes from 5.5 percent to 0.5 percent, arguing that lower transaction costs could help revive investment and activity in the property market.

Among its investment-focused proposals, the think tank suggested that investors making 100 percent capital investments in industrial projects should not be required to disclose the source of their income, a measure aimed at encouraging industrial expansion and economic growth.

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The recommendations also include incentives designed to increase overseas remittances and attract greater investment inflows into the country.

The federal government is scheduled to present the Budget 2026-27 before the National Assembly on June 5, where taxation, economic growth and revenue-generation measures are expected to remain key areas of focus.