IMF Recommends Tax Reforms Targeting Pakistan’s Agriculture, Real Estate, and Retail Sectors

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The first review of Pakistan’s $3 billion Standby Arrangement with the International Monetary Fund (IMF) has taken a heated turn, as the IMF is supporting the imposition of taxes on Pakistan’s retail, real estate, and agricultural sectors, according to sources within the Federal Bureau of Revenue (FBR).

Technical-level discussions between Pakistan and the IMF are underway, and various avenues for bridging the country’s financing needs are being explored.

The IMF’s suggestions include the strengthening of real estate taxation measures.

Moreover, if there is a shortfall in tax revenue, the IMF proposes the implementation of a fixed tax on retailers during the ongoing fiscal year. FBR sources have indicated that the tax regulator may be empowered to tax retailers after December.

It has also been highlighted that consultations with the provinces are mandatory when considering taxes on the agricultural sector. Simultaneously, the FBR has submitted a report to the IMF outlining potential revenue projections by the end of the current fiscal year.

According to sources, the IMF mission is expected to respond to this revenue report within two days.

Furthermore, the IMF was briefed on the Tax Policy and Management Task Force operating under the jurisdiction of the tax regulator.

Talks with the IMF began late last week, with both sides exchanging critical data to expedite the ongoing review process. Should the IMF be satisfied with Pakistan’s performance during this review, a second tranche of $700 million is anticipated to be disbursed.

The successful outcome of this review holds significant implications for Pakistan’s economic stability and its ability to secure continued financial support from the IMF, a crucial factor in the country’s financial stability.

Ammara Ahmed

Ammara Ahmed

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