The International Monetary Fund (IMF) has reportedly recommended to the Federal Board of Revenue (FBR) the imposition of additional taxes on various sectors including retail, real estate, and agriculture.
In ongoing technical-level discussions between Pakistan and the IMF, it has been suggested that a more stringent enforcement of real estate taxes be implemented, and in case of a shortfall in tax revenue, a fixed tax might be imposed on retailers within the current financial year.
The IMF has proposed that the tax regulator should consider exercising its authority to levy taxes on retailers after December. While acknowledging that consultation with provinces is imperative for imposing taxes on the agricultural sector, the IMF is pushing for a more comprehensive approach to enhance revenue generation.
Meanwhile, the FBR has submitted a report to the IMF outlining potential revenue projections by the end of the current financial year. The mission team is expected to provide a response to the revenue report within two days.
Furthermore, the IMF has been briefed on the Tax Policy and Management Task Force operating under the purview of the tax regulator. It has been revealed that the FBR has completed the separation of tax policy from enforcement, with a Grade-21 officer now overseeing tax policy matters within the Finance division.
Additionally, the IMF has requested an implementation report on Track and Trace. Notably, discussions with the IMF commenced on November 2, 2023, with both sides exchanging crucial data to expedite the ongoing review process.
The outcome of this review holds significant implications for Pakistan’s economic stability and its ability to secure continued financial support from the IMF. If the IMF finds Pakistan’s performance satisfactory during the review, it is anticipated that a second tranche of $700 million will be disbursed, providing crucial financial support and bolstering the nation’s economic resilience.