Pakistan plans mining tax breaks ahead of 12 to 13 November investor forum: 1% tax on export proceeds proposed

The government is preparing a fiscal incentive package to attract investment in Pakistan's copper and gold reserves, which it estimates at $8 trillion, as part of the National Mineral Policy 2026, ProPakistani reported. It is meant to be shown to foreign investors at the Pakistan Minerals Investment Forum (PMIF) on 12 and 13 November, but the Finance Division has not yet approved it.

Why a package is needed

The incentive proposals went to the Finance Division during this year's budget process, but no complete programme was introduced then. Sources told ProPakistani that the policy document is ready, and that without a matching tax package its ability to draw investment could be limited. The Petroleum Division has asked the Finance Division to prioritise it.

What the proposals contain

The measures were developed with a model by the consultancy Wood Mackenzie.

• Sales tax (GST): a 30-year exemption on imported and locally bought goods and services used in exploration and development, running until commercial production begins. It may continue after production starts for export projects.
• Withholding tax: cut to 4% on local goods and 8% on local services, with payment deferred until production begins.
• Import duty: exemption on capital goods and project equipment during exploration, development and construction.
• Income tax: the usual corporate income tax would be replaced by a 1% presumptive tax on export proceeds plus a 0.5% development surcharge.
• Super tax: 30-year exemption. Dividends paid after commercial production starts would be exempt from withholding tax for 15 years.
• Losses and depreciation: exploration losses carried forward without limit; depreciation allowances carried forward for 10 years; accelerated depreciation of up to 100%, with the standard rate rising from 15% to 30%.
• Stability: fiscal stability clauses fixing the tax terms at the time a concession is awarded, broadly following those given to the oil and gas sector.

Wood Mackenzie's analysis says corporate income tax treatment is the biggest factor in an investor's internal rate of return.

What to watch

None of this is law yet. Tax changes of this size would need approval from the Finance Division and, for changes to tax law, legislation. We have also covered Reko Diq's timeline and the mineral export target. For how company tax works today, see our sales tax calculator.