The International Monetary Fund (IMF) has urged Pakistan to levy income tax worth around Rs225 billion while doubting the sustainability of revenue performance as a result of a policy change to reduce imports.
The IMF has demanded that those whose revenue impact exceeds Rs225 billion have their sales tax exemptions revoked, according to the sources, who added that the final decision on whether to accept or reject the demands would be made during the policy level talks with the IMF, which begin on October 13 in Washington.
The call for more taxes was unexpected, especially since the FBR beat its first-quarter tax collection target by Rs187 billion, putting it on track to meet the yearly target of Rs5.829 trillion.
Pakistan’s government promised in April that starting in July, it will decrease the number of income tax slabs to roughly five and rationalise the income tax rates for salaried and entrepreneurial persons.
Despite the reduction in imports, Pakistani authorities estimate that the annual import bill would still be approximately $72 billion. According to the IMF, the limitations may bring the bill down to $60 billion.
According to FBR Chairperson Dr. Mohammad Ashfaque, the IMF is happy with the board’s collection so far.
After attending the Senate Standing Committee on Finance at Parliament House, he spoke to the press.
He stated that while ongoing negotiations with the IMF have not yet to a conclusion, the Fund’s staff was happy with the board’s collection. He claimed that the FBR surpassed its revenue collection target by Rs186 billion in the first quarter, with Rs1,395 billion collected in the first three months of the current fiscal year.
As per the sources, IMF has also asked Pakistan to increase electricity prices to achieve the desired set targets.