IMF pressures Pakistan for tax reforms, calls for intensified recovery efforts

The International Monetary Fund (IMF) is urging Pakistan to intensify efforts towards tax recovery. 

Specifically, the IMF calls for increased income tax collection from retailers and the real estate sector, alongside a heightened focus on agriculture income. 

The IMF emphasises collaborative actions between the federal government and provinces to enhance tax recovery, considering the imposition of a fixed tax on retailers in case of collection shortfalls after December. 

Additionally, the IMF recommends consultations with provinces for taxing agriculture and real estate. Proposals for tax policy amendments and addressing taxation flaws have been extended to the Federal Board of Revenue (FBR) by the IMF mission, emphasising effective taxation policies and enforcement in sectors with insufficient tax recovery. 

The FBR has presented a revenue projection report to the IMF team for the current fiscal year, with the IMF expected to respond by Saturday. During the discussions, the FBR briefed the IMF on the task force dedicated to tax policy and administration. 

As part of an agreement with the IMF, Pakistan commits to sharing data on tax evaders through collaboration with the FBR, banks, and NADRA, aiming to enhance overall tax collection. 

This agreement was reportedly reached during policy review talks, facilitating the release of a $700 million loan tranche under the Standby Agreement (SBA).