FPCCI Welcomes Macroeconomic Stabilization in Budget 2026-27 Cautions Against Inflationary Tax Targets Atif Ikram Sheikh, President FPCCI

Islamabad / Lahore / Karachi: Mr. Atif Ikram Sheikh, President of the Federation of Pakistan
Chambers of Commerce & Industry (FPCCI), has acknowledged the presentation of the Rs. 18.7
trillion Federal Budget 2026-27, commending the government’s efforts toward macroeconomic
stabilization – while urging a stronger transition toward sustained economic and industrial
growth.

IMr. Atif Ikram Sheikh, addressing the business community and media in a post-budget session
today, the President of FPCCI congratulated Prime Minister Mian Muhammad Shehbaz Sharif
and the government’s economic team on their fifth consecutive federal budget – noting that it
reflects a vital continuity of economic policy.

Mr. Atif Ikram Sheikh said that Pakistan's economy has shown encouraging signs of stability;
with GDP growth improving to 3.7%, the fiscal deficit reducing to 0.7% of GDP, and public debt
servicing costs declining by 23% – the economy has undeniably moved toward fiscal discipline.
However, the Federal Budget is not merely a statement of revenue and expenditure; it is a critical
policy document that must dictate our transition from sheer stabilization to robust economic
growth, he added.

Welcomed Relief and Accepted Proposals
Mr. Atif Ikram Sheikh expressed appreciation that several of its key recommendations were
incorporated into the budget, signaling a partial shift toward a “Growth-Driven Model.” Key
budget measures welcomed by the business community include:

• Tax Relief: The abolishment of the Capital Value Tax (CVT) on foreign assets and the elimination of the Federal Excise Duty (FED) on international business class travel.
• Super Tax Reforms: The abolishment of the Super Tax on six slabs up to Rs. 500 million, a reduction from 10% to 8% for incomes exceeding Rs. 500 million, and a complete waiver for exporters.
• Salaried Class Support: The elimination of the surcharge on salaried individuals and considerable reductions in tax rates across all slabs.
• Sector-Specific Incentives: The extension of the 0.25% final tax exemption on IT exports until June 2029, and the reduction of Withholding Tax (WHT) for filers in the construction sector by 50% (from 2.5% to 1.25% on purchase, and 5.5% to 2.75% on sale).
• Retail Digitalization: A new 1% fixed sales tax scheme for retailers with annual sales under Rs. 200 million, exempting them from POS machines and routine audits via a green QR code system.
• Exporter Relief: A revised 1.25% Minimum Tax for exporters, replacing the previous 1% Minimum and 1% Advance Tax structure.

Core Economic Concerns and Unaddressed Proposals
Mr. Atif Ikram Sheikh maintained that, despite the positive indicators, FPCCI highlighted
significant concerns regarding the overarching economic environment. The Investment-to-GDP
ratio remains stagnant at 14.38%, and the savings rate has declined to 14.13%. Most alarmingly,
urban poverty has surged from 11% to 17%, reflecting a significant downturn in core business
activities.
Mr. Atif Ikram Shikh voiced strong reservations regarding the Federal Board of Revenue's (FBR)
aggressive tax collection target of Rs. 15.2 trillion (a 17% increase) and the petroleum levy target
of Rs. 1.7 trillion (an 18% increase). The Federation warned that these targets risk further fueling
inflation amid already high international oil prices.
Furthermore, several critical FPCCI proposals designed to spur industrialization and export
competitiveness were notably absent from the budget speech, including:

• Restoration of the Final Tax Regime (FTR): Restoration of the Final Tax Regime for exporters.
• Corporate Tax Reductions: Reductions in the corporate tax rate and turnover tax under Section 113.
• Minimum Tax Reforms: Elimination of the Minimum Tax Regime and Further Tax.
• Sales Tax Act Amendments: Withdrawal of the repeal of Section 8B of the Sales Tax Act.
• Economic Digitalization: Broader systemic digitalization of the economy.

Next Steps and Comprehensive Review
Mr. Atif Ikram Sheikh highlighted that the proposed measures give mixed signals regarding the
support for sustained industrialization, job creation, and higher economic growth,” the President
noted. “The next phase of reforms must hyper-focus on productivity enhancement, export
diversification, and lowering the cost of doing business.

The FPCCI considers it premature to issue a final assessment of the budget at this stage. Over the
next 48 hours, the Federation will conduct a comprehensive review of the Finance Bill in
consultation with member chambers, trade associations, and key stakeholders across the country.
A detailed response outlining the business community’s complete observations and
recommendations will be issued subsequently.

The FPCCI remains committed to constructive engagement with the government to build a
stronger, more competitive, and prosperous Pakistan.

Brig Iftikhar Opel, SI (M), Retd.
Secretary General