The International Monetary Fund has asked Pakistan to abolish all sales tax exemptions and move toward a uniform sales tax system as budget negotiations between the IMF mission and the Federal Board of Revenue entered their final phase.
According to sources, the IMF mission held multiple meetings with FBR officials to finalize revenue targets and tax measures for the upcoming fiscal year.
The IMF is reportedly insisting on a Rs. 15.264 trillion tax collection target for FY2027, while FBR officials are still attempting to negotiate a lower target.
Sources said the IMF has also demanded Rs. 778 billion in enforcement-related revenue measures along with approximately Rs. 430 billion in new taxes, during the next fiscal year.
FBR officials are expected to brief the IMF on proposed sectors and areas where new taxation measures could be introduced.
According to sources, Pakistan and the IMF have broadly agreed on maintaining the tax-to-GDP ratio target at around 11.2 percent for the next fiscal year, although discussions on sales tax reforms remain ongoing.
The IMF has proposed abolishing all categories of sales tax exemptions while lowering the overall sales tax rate and applying it uniformly across sectors.
Sources said the Fund has suggested reducing the higher sales tax rate from 22.8 percent to 18 percent while eliminating preferential treatment and exemptions currently available to different industries and sectors.
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billions of Rs are already stuck with the FBR of the export sector...so exporters get ready to open your shops here