Govt rejects tax relief on inter-corporate dividends
The federal government has rejected a proposal to withdraw tax on inter-corporate dividends for the 2026-27 budget, a move opposed by the IMF and aimed at avoiding multiple corporate taxation.
- Federal government's rejection of tax withdrawal.
- IMF's opposition to the tax proposal.
- Avoiding multiple taxation on the corporate sector.
ISLAMABAD: The federal government rejected a major relief measure for the corporate sector which originally proposed withdrawal of tax on inter-corporate dividends in the budget (2026-27).
It is learnt that a proposal was drafted that the government may withdraw inter-corporate dividends tax in coming budget. However, the proposal has been rejected during the budget review meeting on Wednesday.
READ MORE: Corporate sector: restoration of tax neutrality for ICDs under review
The Tax Policy Office, Ministry of Finance has reviewed a proposal to restore tax neutrality for dividends distributed within corporate group structures (Inter-Corporate Dividends) to avoid excessive/multiple taxation on the corporate sector.
Sources said that the International Monetary Fund (IMF) has also opposed the said proposal. “There are no changes of materialising of the proposal,” they added.
Copyright Business Recorder, 2026