The government is reviewing proposals to provide relief to salaried individuals while also expanding the tax net to include retail and wholesale sectors as part of the upcoming budget for FY2026-27, according to the State Minister for Finance.
The remarks were made during a meeting with representatives of the Overseas Chamber of Commerce and Industry (OICCI), where budget proposals from foreign investors and business stakeholders were discussed. The minister said inputs from chambers and industry groups are being actively considered in the ongoing budget-making process.
He added that the government is exploring ways to simplify the tax structure to support economic activity and maintain an investment-friendly environment.
Push for Broader and Fairer Tax System
During the meeting, OICCI stressed the need for a more balanced taxation framework, recommending that agriculture, retail and wholesale trade, real estate, and services sectors contribute more fairly to national revenues.
The chamber proposed a gradual reduction in the corporate tax rate to 28% in FY2026-27, followed by a further cut to 25% over the next three years. It also suggested the phased removal of the super tax during the same period.
OICCI noted that when corporate tax is combined with other levies such as the super tax, Workers Welfare Fund, and Workers Profit Participation Fund, the effective tax rate rises to around 46%, which it said is affecting business competitiveness.
Concerns Over Banking Sector and Investment Costs
The chamber also raised concerns over high taxation in the banking sector, warning that elevated tax rates could limit lending capacity and increase the cost of capital for businesses.
Relief Proposed for Salaried Individuals
For salaried individuals, OICCI recommended abolishing the 10% surcharge on higher-income earners and capping the maximum personal income tax rate at 25% to improve fairness and provide relief to taxpayers.
Officials said the proposals are currently under review as part of broader fiscal policy consultations ahead of the federal budget.
