Pakistan is advancing regulatory and taxation reforms to channel domestic institutional funds into private equity, with the government giving priority to mobilizing local capital and finding viable investment opportunities in order to establish a functioning private equity market. Progress was reviewed at the third meeting of the Committee on the National Private Equity Framework, chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb. Participants discussed regulatory changes, proposed tax arrangements, and ways to make it easier to invest in commercially viable businesses and projects.
The committee named banks, insurance companies, mutual funds, pension schemes, and development finance institutions as potential sources of domestic institutional capital, and it discussed local corporations and family offices as likely investors in private equity funds. The discussion also pointed to opportunities from acquisitions, business consolidation, new projects, and exits by existing investors. Participants looked at the chance to build a substantial pipeline of investable opportunities over the next five to ten years by directing available domestic liquidity toward productive economic activity. Muhammad Aurangzeb stressed that mobilizing domestic capital should come first, since it creates the foundation for attracting foreign institutional investors and allows international co-investment in the future.
On the regulatory side, the State Bank of Pakistan briefed the committee on recent changes, including a rise in the permissible investment limit for banks in a single private equity fund from 10 percent to 20 percent. The committee also reviewed measures on fund structures, transparency, investment arrangements, and the participation of financial institutions in private equity funds. Taxation formed another central part of the talks, with participants examining proposals to treat private equity funds as pass-through vehicles, under which tax applies at the level of the investor and not the fund. The Finance Minister called for a comprehensive assessment of international tax models to build a competitive and predictable framework suited to Pakistan, and he said the arrangements should support legitimate investment while preventing tax arbitrage, unintended distortions, and regulatory inconsistencies.
The committee stressed the importance of coordination among regulatory and tax authorities so that different investment vehicles receive consistent treatment. Muhammad Aurangzeb directed the relevant stakeholders to resolve outstanding regulatory and tax issues, step up efforts to mobilize domestic capital, and identify viable investment opportunities so that the framework can move toward implementation. He pointed to the benefits of a developed private equity ecosystem, including deeper domestic capital markets, better access to long-term risk capital, higher private sector investment, and sustainable economic growth. The meeting was attended by the Adviser to the Prime Minister on Privatization, the Secretary Finance, the Chairman of the Federal Board of Revenue, and other committee members from public and private sector institutions. For startups and growth companies, the outcome matters because a working private equity market would widen the pool of long-term funding beyond banks and venture investors.
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