The International Monetary Fund (IMF) has urged Pakistan to end the powers of the Board of Investment, Board of Approval, and Special Economic Zones to independently grant tax incentives under reforms linked to the upcoming federal budget.
The proposed changes form part of broader structural reforms aimed at creating what the IMF describes as a more transparent and competitive investment framework.
Speaking to Business Recorder, Federal Minister for Investment Qaiser Ahmed Sheikh clarified that the new structural benchmarks would apply to future Special Economic Zones, while existing zones would remain protected from the updated requirements.
The minister said Pakistan’s SEZ incentive structure remains largely intact despite the proposed reforms. He added that a few countries currently operating under IMF programs continue to offer investors such extensive incentives within Special Economic Zones.
According to the IMF report, Pakistan has agreed to amend laws governing both Special Economic Zones and Special Technology Zones as part of a gradual shift away from existing fiscal incentive models.
The reforms include moving from profit-based incentives toward cost-based incentives and removing the authority of the Board of Approval, Board of Investment, and SEZ authorities to independently grant tax concessions.
The IMF program also calls for the gradual phase-out of all fiscal incentives available to Special Technology Zones by 2035. The Fund believes the changes will help reduce market distortions, create a more level playing field for businesses, and improve transparency within Pakistan’s investment and industrial policy framework.
