The government is reportedly preparing to reduce the super tax rate for the manufacturing sector as part of a new industrial policy, with plans to gradually lower it to 5 percent over the next four years. This move is contingent upon approval from the International Monetary Fund (IMF), according to sources familiar with the matter.
If the primary fiscal balance remains in surplus, the super tax could be completely abolished in the fifth year, offering significant relief to manufacturers. The draft industrial policy, expected to be finalized and approved by the federal cabinet later this month, contains several reforms designed to strengthen the manufacturing sector.
One key proposal is to increase the minimum threshold for the super tax from Rs. 200 million to Rs. 500 million, meaning smaller manufacturers will be exempted from this levy. Furthermore, the threshold for imposing the 10 percent super tax is proposed to rise from Rs. 500 million to Rs. 1.5 billion, targeting only larger firms for this tax.
The policy draft also includes measures to revive struggling industrial units through the introduction of a bankruptcy framework aimed at restructuring failing businesses. Additionally, easier credit facilities will be provided to support manufacturers and help boost production capacity.
To enhance industrial growth and increase exports, the policy outlines steps to protect investments and improve the competitiveness of the manufacturing sector in international markets. These initiatives aim to create a business-friendly environment, encouraging both domestic and foreign investment.
The new industrial policy is expected to be presented to the federal cabinet for approval within the month, pending IMF endorsement, and it signals a significant step toward addressing longstanding challenges in Pakistan’s manufacturing industry.
