Pakistan tax reforms vital for stability
Tax Reforms in Pakistan are long overdue as the system continues to burden ordinary citizens while shielding elites, experts warn. With one of the highest effective corporate tax rates in the region — nearly 45%, Pakistan is driving away foreign investment and forcing young entrepreneurs to take their businesses abroad.
In FY2024–25, Pakistan attracted just $1.79 billion in foreign direct investment (FDI) compared to India’s $81 billion and Bangladesh’s $3.5 billion. The tax-to-GDP ratio remains stagnant at 9%, among the lowest in South Asia, while nearly a quarter of registered taxpayers file zero returns.
Analysts stress five urgent reforms: broadening the tax base, digitizing the system with AI, simplifying compliance, eliminating overlapping authorities, and ensuring strict but fair enforcement. Successful models from India, Dubai, and the UK highlight how reform can boost growth and trust.
Without decisive action, Pakistan risks further capital flight and stagnation. But with bold tax reforms, the system can shift from harassment to trust, paving the way for stability and prosperity.
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