Budget 2026-27 Taxation May 29, 2026Faisal Shahnawaz Stock exchange proposes lower corporate taxes, restored incentives and removal of withholding taxes to boost listings and market growth. The Pakistan Stock Exchange (PSX) has proposed a series of tax relief measures and investor-friendly reforms in the federal budget 2026-27 (FY27) aimed at strengthening capital markets, encouraging new listings and improving overall investment activity. In its budget recommendations, PSX urged the government to rationalize corporate taxation, restore investor incentives and remove structural anomalies affecting listed companies and corporate groups. One of the key proposals relates to group relief under Section 59B of the Income Tax Ordinance, 2001. The exchange said companies are currently allowed to surrender assessed business losses within a corporate group for only three years, a restriction it argues discourages holding companies from listing subsidiaries. PSX proposed removing any time limitation on the group relief facility to improve corporate structuring flexibility and encourage listings. The exchange also highlighted concerns over double taxation of corporate profits. It noted that companies already face an effective tax burden of around 46%, including corporate tax, super tax, Workers Welfare Fund (WWF) and Workers Profit Participation Fund (WPPF), while dividends are further taxed at 15%. To address this, PSX urged the government to restore the inter-corporate dividend exemption by reinstating Clause 103C of Part I of the Second Schedule, which was withdrawn under the Finance Act 2021. Another recommendation relates to withholding tax on inter-company interest payments within corporate groups. PSX said such taxes create cash flow constraints, increase refund claims and add compliance burdens without generating additional revenue.…