Pakistan Banks Remain Government’s Largest Taxpayers, Says PBA

Pakistan’s banking sector has become the largest contributor to government revenue due to elevated taxation, the Pakistan Banks Association (PBA) reported. While the high tax intake has temporarily strengthened public finances, the PBA warns it is increasingly a drag on the sector’s long-term growth and competitiveness.

The association noted that heavy corporate taxes are reducing profitability, discouraging foreign investment, and limiting banks’ ability to expand credit to the private economy. Margin pressures have also slowed progress in financial inclusion and digital banking expansion—areas critical for economic growth.

The PBA suggested that a gradual reduction in the tax burden could unlock growth opportunities, improve returns, attract foreign capital, and encourage banks to lend more to businesses and consumers. A more balanced tax framework, the association argues, would support a stronger, technology-driven, and inclusive financial system while still generating sustainable government revenue over the medium term.