ISLAMABAD: The Economic Policy & Business Development (EPBD) a leading economic think tank on Monday unveiled sweeping structural reform proposals aimed at steering Pakistan out of its recurring boom-and-bust economic cycle, slashing the tax burden on businesses and salaried individuals, and shifting the economy toward export-led growth with a target of achieving up to 8.5 percent GDP growth by FY31.
EPBD launched Pakistan’s first-ever “Shadow Policy Documents”, including an alternative tax reform framework, shadow federal budget, shadow economic survey, and a five-year development plan, presenting what it described as a citizen and business-focused alternative to the government’s current economic policies.
The documents were formally launched by EPBD Chairman Dr Gohar Ejaz, who said Pakistan needed “structural, homegrown reforms” to break free from perpetual dependence on IMF programmes and place the economy on a sustainable growth trajectory.
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Dr Ejaz was flanked by EPBD Patron-in-Chief Bashir Jan Muhammad, EPBD Chief Executive Officer Ahmad Nawaz Sukhera, and Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Patron-in-Chief SM Tanveer during the launch ceremony.
According to the think tank, Pakistan’s tax structure had become “distorted, imbalanced, regressive and extractive”, generating revenue at the cost of documented sectors, productive businesses, and economic growth.
In its proposed “Tax Policy & Administration Reforms”, EPBD called for reducing the corporate tax rate from 29 percent to 25 percent, withdrawing super tax for all sectors except banking, and eliminating withholding tax on inter-corporate dividends in a bid to enhance private sector competitiveness and reduce the cost of doing business.
The think tank also proposed substantial relief for salaried and non-salaried taxpayers. It recommended reducing the income tax rate for the salaried class from 35 percent to 20 percent, while lowering the rate for non-salaried individuals from 45 percent to 25 percent. It further proposed increasing the exemption threshold to Rs800,000 and allowing standard deductions, estimating a cumulative tax relief of approximately Rs390 billion for salaried taxpayers.
As part of broader tax reforms, EPBD proposed reducing withholding tax categories from 52 to 32 and gradually lowering the general sales tax (GST) rate from 18 percent to 15 percent over a three-year period. The think tank also recommended abolishing the “non-filer” category and introducing joint tax filing for families while expanding the tax base by bringing retailers, vendors, and merchants into the formal net.
For the real estate sector, the proposals included reducing Sections 236C and 236K transaction taxes to a flat 0.5 percent each from existing rates of up to 5.5 percent, alongside complete abolition of Section 7E dealing with deemed income tax on immovable property.
The think tank also stressed immediate and time-bound tax refunds, automation and simplification of tax collection systems, and rationalisation of agriculture income tax by shifting from corporate-style taxation to land-based treatment. It further proposed that Workers Welfare Fund (WWF), Workers Profit Participation Fund (WPPF), EOBI, and social security mechanisms should be managed independently by the private sector.
Highlighting the growing burden of tax litigation, EPBD stated that nearly Rs5.7 trillion remained stuck in courts and proposed time-bound judicial decisions along with removal of the mandatory 30 percent pre-deposit requirement for High Court tax appeals. The think tank also called for strengthening alternative dispute resolution mechanisms for faster settlement of tax disputes.
The reform package further proposed amendments to anti-avoidance provisions and Section 111(4) of the Income Tax Ordinance to incentivise inward remittances and investment by overseas Pakistanis. It also recommended restoring incentives for 100 percent equity-based industrial investment under Section 65 of the Income Tax Ordinance.
Copyright Business Recorder, 2026
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