IMF urges Pakistan to broaden taxation to include real estate, agriculture sectors

WEB DESK: In the latest developments, the International Monetary Fund (IMF) has suggested that Pakistani authorities should extend taxation to cover the agriculture, real estate, and retail sectors as part of the ongoing assessment of the $3 billion stand-by arrangement (SBA). 

Sources from the Federal Board of Revenue (FBR) revealed that the proposed tax collection plan has been shared with the IMF’s team. The IMF will review the plan and suggest additional measures accordingly. 

Both parties have identified potential areas to bridge financing shortfalls during discussions. If the FBR fails to meet the tax collection target, further measures have been agreed upon.  

One of the proposed measures includes imposing a fixed tax on retailers, although the IMF has expressed reluctance to accept this proposal. 

Furthermore, the IMF has demanded that Pakistan establish a specific timeframe with provinces for bringing the agriculture sector under the tax net.  

The IMF was also briefed on the tax policy and management task force overseen by the tax regulator. The global lender stressed the importance of Pakistan achieving its tax collection target. 

Negotiations between Pakistan and the IMF officials, including Caretaker Finance Minister Dr Shamshad Akhtar and the IMF’s Mission Chief Nathan Porter, have been ongoing since November 2 under the $3 billion SBA programme.  

According to The News, the discussions are scheduled to conclude on November 15, 2023.

If Pakistan’s performance satisfies the IMF during this review, a second tranche of $700 million is expected to be disbursed by December. 

It is noteworthy that the finance minister categorically stated that there would be no requests made to the IMF to extend the timeframe or increase the size of the $3 billion SBA programme. 

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