By Farooq Awan

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed introducing a 10% tax credit for businesses reinvesting profits into plant, machinery, and digital infrastructure in the federal budget FY2026-27, saying that stronger incentives for expansion can support industrial modernization and increase economic activity.

According to the FPCCI budget proposals document available with Wealth Pakistan, the business body stated that businesses require stronger incentives to reinvest earnings into expansion projects and technological upgrades in order to improve competitiveness and productivity.

The chamber proposed allowing a 10% tax credit for companies that reinvest profits into new plant and machinery or digital infrastructure.

According to the document, the proposed measure aims to encourage businesses to allocate resources toward productive investments rather than limiting expansion because of financial constraints.

FPCCI stated that modernization has become increasingly important as industries face rising competition and growing requirements for technological efficiency.

The organization maintained that investment in modern machinery can improve production efficiency and reduce operational costs over the long term.

According to the proposals, stronger incentives for reinvestment can also accelerate industrial expansion and create a more competitive business environment.

The chamber also highlighted the importance of digital infrastructure in improving business operations.

According to FPCCI, the increasing adoption of digital systems can strengthen operational efficiency, improve data management, and enhance business processes across sectors.

The organization stated that digitalization has become increasingly important for maintaining competitiveness and supporting productivity gains in a rapidly changing business environment.

FPCCI maintained that businesses often require substantial investment to upgrade systems and adopt new technologies, making fiscal support important for accelerating these transitions.

The document noted that stronger investment activity can contribute to broader economic benefits through increased industrial output and expansion of business operations.

According to the chamber, higher levels of business investment can also support employment generation and improve productive capacity within the economy.

FPCCI stated that policy measures encouraging reinvestment can support long-term industrial growth by creating stronger incentives for modernization and capacity enhancement.

The organization emphasized that encouraging productive investment remains important for improving competitiveness and strengthening economic development over time.

Credit: INP-WealthPk