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The Finance Bill 2026-27 is viewed by P@SHA as a significant and positive step for Pakistan’s IT sector, delivering on critical near-term priorities like export tax stability and payment infrastructure improvements. P@SHA maintains IT and ITES exports are projected to reach $4.5 billion in FY 2026, and the budget’s measures are calibrated to sustain this growth trajectory. However, structural reforms needed to attract institutional capital and scale the sector further remain unfinished. Major Budget Wins Taxation and Financial Relief in Budget 2026-27 Concessionary Export Tax Extension: The 0.25% concessionary tax rate on IT exports has been extended through Tax Year 2029, providing crucial policy certainty for multi-year contracts. It was a core P@SHA demand and P@SHA lauds the government on this relief. Card Payment Relief: The advance tax on foreign card payments has been drastically reduced from 5% to 0.5%, significantly easing the working capital burden on companies and freelancers. Startup WHT Exemption: P@SHA hails that under Clause 43F, startups are exempt from withholding tax, allowing them to receive 100% of customer payments immediately rather than waiting for FBR refunds. Some Relief on Salaried Income Tax: The tax surcharge for salaried individuals has been withdrawn, and the threshold for the maximum 35% rate has been raised to Rs. 7 million. Super Tax Rationalization: P@SHA applauds that income below Rs. 500 million is now fully exempt from the super tax, freeing up capital for mid-sized IT firms to reinvest. CVT Abolished: The Capital Value Tax on foreign assets of resident individuals has been eliminated. Telecom, Infrastructure, and Skills Infrastructure Duties Removed: Customs duties on submarine cable landing equipment, mobile phone components, and SIM/smart card raw materials have been reduced to 0%. Skills Investment: The government has allocated over Rs. 10 billion for skills and education, including Rs. 5.29 billion targeted at training 120,000 youth in digital skills. New Compliance Obligations Social Media Tax: A new 5% minimum withholding tax on social media income has been introduced for residents. Digital Reporting: IT companies will be required to file digital financial statements in CSV, XLSX, or XML formats starting in Tax Year 2026. E-invoicing Penalties: Fines for failing to integrate with e-invoicing systems have been increased to Rs. 1 million for the first default. Unfinished Agenda and Forward Asks While acknowledging the wins, P@SHA identified key structural gaps that need addressing in future budget cycles: PE/VC Fiscal Transparency: The budget failed to introduce a pass-through clause for Private Equity and Venture Capital funds, which is critical for attracting foreign institutional investment. Freelancer vs. Remote Worker Classification: No legislative distinction was made between genuine independent freelancers and full-time remote employees of foreign companies, sustaining a tax loophole that drains senior talent from domestic IT firms. Permanent Tax Exemption: P@SHA advocates converting the 3-year extension of the 0.25% IT export tax rate into a permanent statutory exemption to align with competing global markets.

High Interest Rates Hinder Investment and Business Expansion; Reduction Was Necessary to Promote Economic Activity: President KATI Karachi: President of Korangi Association of Trade and Industry (KATI), Muhammad Ikram Rajput, expressed disappointment over the State Bank of Pakistan’s decision to keep the policy interest rate unchanged at 11.50 percent under its latest monetary policy announcement. He stated that under the current economic conditions, a reduction in the interest rate was essential to support business activity, industrial recovery, investment growth, and particularly the development of the SME sector. He added that the decision may further increase challenges for industries. He said that the business community had expected the central bank to adopt a more accommodative monetary stance in light of relatively easing inflation and improving economic stability, enabling industries to reduce production costs and encourage greater investment opportunities. Muhammad Ikram Rajput noted that high interest rates make borrowing more expensive for the private sector, which negatively impacts new investments, industrial expansion, and job creation. He emphasized that the SME sector is the backbone of the national economy and stressed that providing affordable and accessible financing facilities is the need of the hour for sustainable growth. The President of KATI further stated that many economies around the world are adopting softer monetary policies to support economic growth, whereas maintaining high interest rates in Pakistan could become an obstacle to industrial development. He urged the government and the State Bank to take into account the concerns of the industrial and business sectors in upcoming monetary policy decisions and adopt measures that promote economic growth, boost exports, and strengthen industrial activity. He expressed hope that future decisions regarding interest rates would help restore business confidence and place the economy on a path toward sustainable growth.

Strong credit growth signals robust recovery in the automotive sector amid improving economic indicators.KARACHI: Auto financing in Pakistan has shown remarkable growth, reaching PKR 360 billion in April 2026. This marks a significant 36.6% increase compared to PKR 263 billion in April 2025, according to data highlighted by Arif Habib Limited. On a month-on-month basis, financing also rose by 4.1% from March 2026, reflecting sustained momentum in consumer and commercial vehicle lending.Sectoral Performance and Economic DriversThe transport and auto segment has outperformed other categories in private sector credit, demonstrating resilience and strong demand recovery. This growth aligns with broader positive trends in the automotive industry, where vehicle sales jumped over 108% year-on-year in April.Lower interest rates, improved macroeconomic stability, and higher consumer confidence appear to be key factors driving this uptick. Banks have expanded lending for automobiles as purchasing power stabilizes and economic activity rebounds. Outlook and Industry Implications Analysts view this surge as a positive indicator for the overall economy. Increased auto financing typically boosts related industries including manufacturing, dealerships, insurance, and after-sales services. It also supports employment generation in one of Pakistan’s key industrial sectors. The consistent rise in auto loans since mid-2024 suggests a structural recovery. Industry stakeholders expect this trend to continue if interest rates remain supportive and inflation stays under control. However, challenges such as exchange rate volatility and input costs for local assemblers will need monitoring.This development comes at a time when Pakistan’s private sector credit is gradually gaining traction, shifting focus from government borrowing toward productive economic activities.

Karachi: Service Long March Tyres Limited, Pakistan’s first and largest truck and bus radial (TBR) tyre manufacturer and exporter, is set to begin the book building process for its Initial Public Offering (IPO) on May 18, 2026, which will continue till May 19, 2026. The IPO is being offered at a price band of PKR 14.25 to PKR 19.95 per share, providing investors an opportunity to participate in one of Pakistan’s emerging manufacturing and export-led growth stories. The company has positioned itself as a key player in Pakistan’s tyre industry, with a strong focus on truck and bus radial tyres, a segment considered critical for transportation, logistics, trade, and industrial movement. Commenting on the IPO, Shahid Ali Habib, CEO of Arif Habib Limited, the Lead Manager of the Issue, said the offering represents an important opportunity for investors to gain exposure to Pakistan’s manufacturing and export sectors.“Service Long March Tyres is a compelling IPO story backed by industrial scale, export potential, import substitution, and a strong growth outlook. The IPO will likely to raise Rs7.8 billion at the upper circuit.The company will utilise this to support SLM’s entry into the passenger car tyre segment. This move is aiming at reducing reliance on imported tyres and strengthening domestic manufacturing capacity. As part of its expansion, SLM intends to establish a dedicated PCR tyre production facility, with operations targeted to begin in January 2028. The plant will initially produce around 2 million tyres annually, with capacity projected to rise to 2.5 million units in FY2029 and 3 million units by FY2030. The company is backed by modern Chinese technology, which has enabled it to achieve a competitive cost structure among local and international tyre manufacturers. This advantage supports its export strategy, with the company targeting a significant portion of its production for international markets. According to the management, Service Long March Tyres is being evaluated at around US$550 million for the IPO, while the company aims to achieve a valuation of US$1 billion within the next two years through capacity expansion, export growth, and deeper penetration in local and global markets.

China has agreed to purchase 200 aircraft from Boeing, according to Donald Trump. The announcement was made during an interview with Fox News following Trump’s recent meetings in Beijing. Read More: https://theboardroompk.com/pakistan-hits-highest-ever-average-income-per-person-but-still-one-of-lowest-in-the-world/ President Trump said the agreement was reached after discussions with Xi Jinping, revealing that Boeing had originally sought an order for 150 aircraft but China decided to increase the purchase to 200 jets. The deal is being viewed as a significant breakthrough in easing trade tensions between the two countries and marks Boeing’s first major Chinese order in nearly a decade. The multibillion-dollar agreement is expected to support thousands of jobs across the United States while benefiting Boeing’s extensive supply chain. Treasury Secretary Scott Bessent had earlier indicated that a major aircraft order could emerge during the visit. Industry analysts see the agreement as a positive sign for future aviation and trade relations between the two economies. Trump described the order as a “big thing” for Boeing and said the commitment reflects improving economic cooperation between Washington and Beijing. Aviation experts believe the purchase will likely include Boeing’s popular 737 aircraft models, with deliveries expected to continue over several years. The development comes amid wider discussions between the two nations on tariffs, trade barriers, and market access, signaling a renewed focus on practical economic cooperation. The announcement also generated optimism in global aerospace markets, with Boeing shares reportedly reacting positively in early trading. Analysts say the agreement highlights the importance of high-level diplomacy in strengthening business ties and could pave the way for further commercial opportunities between the United States and China.