The government will announce new taxation measures of Rs. 40 billion and relief to traders in electricity bills after the approval of the Executive Board of the International Monetary Fund (IMF) for the release of about $1,177 million under the combined seventh and eighth reviews of the Extended Fund Facility (EFF).
Highly placed officials in the Ministry of Finance told ProPakistani that the government is not in a position to do anything on the taxation side which creates problems in the IMF’s Board approval of about $1,177 million (SDR 894 million) bringing total disbursements under the programme to about $4.2 billion.
Till approval from the IMF, the government will not touch the taxation measures taken through Finance At 2022 to avoid any objection to the fund on the taxation side. The tax relief to the traders through the Ordinance would have implications over the coming approval of the IMF.
Therefore, the government has decided to take new measures following the approval of the IMF Board meeting after August 25, 2022.
Sources confirmed that the Ordinance would not be issued in the coming days but by the end of the current month.
The International Monetary Fund (IMF) team has reached a staff-level agreement (SLA) with Pakistan authorities for the conclusion of the combined seventh and eighth reviews of the Extended Fund Facility (EFF), with the agreement now subject to the approval of the Executive Board.
The government is likely to raise the FED on tobacco products and beverages through the Presidential Ordinance. Moreover, the income tax exemption for Pakistani diplomats serving abroad will be restored.
The Presidential Ordinance may impose a very low rate of sales tax on a few zero-rated sectors and slight raise in the rate of the FED on cigarettes.
The Presidential Ordinance would also amend the Finance Act 2022 to ensure that the banks would not be required to pay higher tax rates for maintaining a low advances-to-deposits ratio (ADR) on their earnings from 2021. Under the proposed amendment, the special tax on (the basis of) ADR won’t be applied retrospectively.
Through the latest Finance Act, the government increased the tax rates on the interest income that banks earn on their investments in treasury bills as well as Islamic and conventional bonds.