The Pakistan Chemicals and Dyes Association (PCDMA) on Wednesday submitted its pre-budget proposals to the Federal Board of Revenue (FBR) for incorporation into the upcoming federal budget 2026-27, which is scheduled to be presented in the National Assembly later this month.
Key Recommendations for Tax Reforms
Chairman PCDMA Salim Wali Muhammad urged the FBR to ease the compliance burden on businesses, cut the General Sales Tax (GST) rate, and restore protections for commercial importers. He emphasized that mounting compliance requirements and aggressive audits are steadily driving taxpayers into the informal economy.
Muhammad noted that while people generally want to pay taxes, limited awareness and tech-savviness lead to honest mistakes. He called on the FBR to adopt a facilitative and educational approach instead of relying on notices and enforcement measures.
GST and Income Tax Proposals
Among the association's key recommendations is a reduction in the GST rate from 18 percent to 16 percent, followed by a gradual transition to single-digit taxation. On income tax, the PCDMA proposed lowering withholding tax on local supplies of raw materials from the current rates of 5 percent and 5.5 percent to 2 percent and 2.5 percent, respectively.
Restoration of Trade Facilities
The chairman also called for the restoration of the Final Tax Regime (FTR) for commercial importers and the return of audit exemptions previously linked to the payment of additional sales tax. He further sought the restoration of NTN-based self-clearance facilities for commercial importers, stating that the withdrawal of this facility had increased delays and administrative bottlenecks at customs offices.
Export Facilitation Scheme
PCDMA also recommended discontinuing the Export Facilitation Scheme (EFS), claiming it is vulnerable to misuse and revenue leakage.
The proposals have been submitted to the FBR and are expected to be discussed during pre-budget consultations with trade and industry stakeholders ahead of the federal budget announcement.
