ICMA proposes new taxes on digital services, gaming and second-home ownership in budget 2026-27

ISLAMABAD: The Institute of Cost and Management Accountants of Pakistan (ICMA) has put forward a set of new taxation proposals for the upcoming Budget 2026-27, recommending levies on digital services, online and speculative gaming, corporate brand promotion, and second-home ownership in a bid to widen the country's narrow tax base.

Proposals submitted to Tax Policy Office

The statutory body of accounting and management professionals submitted its recommendations to the Tax Policy Office (TPO) of the Ministry of Finance. According to the ICMA, the proposals were developed following a thorough analysis of Pakistan's economic priorities, sectoral challenges, and international best practices, with the aim of broadening the tax net and bringing emerging sectors into the formal economy.

Seven key segments identified

The ICMA's recommendations are structured around seven key segments, which include new revenue initiatives designed to broaden the tax base, climate and green taxation measures, and urban and transport revenue proposals, among others. The proposals also encompass corporate and financial sector-related measures.

Among the specific targets outlined in the proposals are streaming platforms, gaming services, and digital media — sectors that have grown significantly in recent years but remain largely outside the formal tax framework. The ICMA has also recommended the introduction of carbon and pollution levies on industries as part of its climate and green taxation segment, signalling a push towards environmentally conscious fiscal policy.

Focus on expanding the tax base

The proposed measures reflect a broader effort to address Pakistan's persistently low tax-to-GDP ratio by tapping into under-taxed or untaxed areas of the economy. The inclusion of levies on second-home ownership and corporate advertising and brand promotion suggests the ICMA is seeking to capture revenue from segments associated with higher disposable incomes and corporate spending.

The proposals come at a time when the government faces significant fiscal pressures and has been under consistent pressure from international financial institutions to expand its revenue base. The ICMA's recommendations, if adopted by the government, could form part of the broader fiscal strategy to be unveiled in the federal budget for the financial year 2026-27.

The institute's input adds to the ongoing pre-budget consultations, during which various professional bodies, trade associations, and industry stakeholders present their recommendations to the finance ministry for consideration in the annual budget exercise.