The International Monetary Fund (IMF) and the Federal Board of Revenue (FBR) started the first round of talks on Thursday, focusing on the overall performance of the FBR and IMF’s recommendations to abolish special tax regimes and preferential tax treatments.
During the first meeting between the IMF team and the FBR high-ups on the second review of the Stand-by Arrangement (SBA), the FBR Chairman gave an overall view on the FBR’s tax collection, digital initiatives, and reforms in the tax administration.
What IMF wants
The IMF has asked the FBR to increase the incidence of tax on salaried/non-salaried class, impose an 18 percent sales tax on petroleum products, stationery items, medicines, and unprocessed food, and also bring 3 million retailers into the tax net.
The IMF has also recommended repealing remaining exemptions for donations and non-profit organizations contained in the Second Schedule of the Income Tax Ordinance and making them eligible for tax credits.
The Fund has recommended reviewing the charitable donations tax credit, as well as the credit for certain persons, to assess whether changes to eligibility requirements would be desirable.
The Fund has also recommended expanding the remit or terms of reference of the National Tax Council (NTC) to include the harmonization of tax rates and provide bases for agricultural income tax and property tax. One of the recommendations of the IMF is to establish a Tax Policy Unit within the Ministry of Finance, Revenue, and Economic Affairs.
The meetings will continue on Friday where the focus will be restructuring of FBR and revenue collection position for 2023-24.
Its more like a sponsored article, where selective desires of IMF have been highlighted. IMF also wants to decrease the benefits to government servants and those in uniforms eating up more than 70% tax payers money in this country