Govt Will Do Anything Possible to Achieve IMF’s Tax Target Next Fiscal Year

The federal government is preparing to reduce income tax and sales tax exemptions in the upcoming FY2026-27 budget to increase revenue collection and meet fiscal commitments linked to the International Monetary Fund’s (IMF) program.

According to official documents, the reduction in tax exemptions is expected to generate additional revenue equal to 0.15 percent of GDP. Authorities are also targeting another 0.15 percent of GDP in additional income through the implementation of the Federal Board of Revenue’s (FBR) ongoing reform plan.

The government expects the combined impact of these reforms and policy adjustments to generate additional revenue equivalent to 0.3 percent of GDP.

Documents show Pakistan has also assured IMF that further tax measures will be introduced if government revenues fall short of official targets during the fiscal year.

According to the plan, new permanent tax measures could be implemented in the event of weaker than expected revenue collection. The upcoming budget is also expected to include additional steps based on earlier IMF recommendations related to tax broadening and revenue administration reforms.

Officials said the FBR’s revenue targets for the next fiscal year have been structured around expectations of higher tax collection through both policy measures and administrative improvements.

Under the reform roadmap, FBR’s additional revenue collection is projected to reach Rs. 7.022 trillion by the end of December 2026 through expanded enforcement, policy changes, and reforms in the tax administration system.