No rush for new taxes: FBR tells IMF, considers fuel tax reduction

ISLAMABAD: The Federal Board of Revenue (FBR) has told International Monetary Fund (IMF) that there is no immediate need for additional tax measures apart from a possible lower sales tax on petroleum products which is still being considered.

This involves sales tax rate 5-7 per cent on petroleum products to help address potential revenue shortfall for the ongoing fiscal year.

In a recent meeting, according to Business Recorder, the tax authority has assured the international lender that these measures are not urgent for now, as it’s too early in the fiscal year to introduce contingency revenue actions.

The government, however, reiterated its commitment to continuing the economic reforms agreed upon under the $7 billion EFF programme.

The IMF team, including mission chief Nathan Porter, met Finance Minister Muhammad Aurangzeb, as well as other key officials, including Minister of State for Revenue Ali Pervez Malik, FBR Chairman Rashid Mehmood Langrial and State Bank of Pakistan (SBP) Governor Jameel Ahmad.

They discussed government’s progress in first quarter of the fiscal year and its plan to achieve annual revenue target of Rs12,970 billion.

The IMF was also briefed on Pakistan’s efforts to digitise the supply chain of various sectors and expand digital monitoring system. There was a particular focus on progress made in tracking petroleum, beverages, pharmaceuticals and steel sectors.

According to the FBR’s Tax Expenditure Report 2024, Pakistan suffered revenue loss of Rs1.25 trillion in 2022-23 owing to sales tax exemptions on petroleum products, particularly petrol, diesel, kerosene and light diesel oil.

This loss has been significantly higher compared to previous years due to a zero-rating policy implemented from February 2022.

Read next: Gold price witnesses major Rs7,000 cut per tola