The federal government is preparing to provide significant relief to Pakistan’s export sector in the upcoming Budget 2026-27 by removing the existing 1% advance tax on exporters. The proposed measure is expected to reduce financial pressure on exporting businesses and support the country’s export-led growth strategy.
According to informed sources, the abolition of the 1% advance tax could result in relief of up to Rs60 billion for exporters. Business leaders and industry representatives have long argued that the tax creates unnecessary financial burdens and complicates the refund process.
Officials familiar with the budget discussions revealed that the proposal has also been discussed with the International Monetary Fund (IMF) as part of broader fiscal and taxation reforms. The government is reportedly seeking to improve the ease of doing business while maintaining compliance with economic commitments.
At present, exporters are required to pay a 1% advance tax on export proceeds, which often leads to substantial refund claims. Many businesses have faced delays in receiving these refunds, affecting cash flow and creating administrative challenges for exporters.
Industry stakeholders have repeatedly highlighted that the advance tax mechanism ties up working capital and increases operational costs. As a result, exporters have consistently urged the government to eliminate the requirement and introduce a more efficient taxation framework.
If the proposed change is approved, exporters will no longer need to submit refund claims related to the advance tax deduction. This is expected to streamline tax administration, reduce paperwork, and improve liquidity for businesses operating in international markets.
The anticipated measure is being viewed as a positive step toward strengthening Pakistan’s export sector. By addressing a long-standing concern of exporters, the government aims to encourage higher export volumes, enhance competitiveness, and support economic growth in the new fiscal year.
