FBR 'requests' IMF to reduce tax collection target for FY2025-26

Prime Minister (PM) Shehbaz Sharif is making efforts to convince the International Monetary Fund (IMF) to allow a reduction in the Federal Board of Revenue’s (FBR) tax target for FY2025-26, ARY News reported on Wednesday, citing sources.

According to details, the premier has proposed a Rs250 billion cut in FBR’s tax collection target for the next budget. Efforts are underway to persuade the IMF to accept this revision.

Sources revealed that FBR has formally requested to lower its tax target from Rs14,307 billion to Rs14,057 billion.

The rationale behind the proposal is to avoid imposing new taxes while mitigating the risk of revenue shortfalls that could arise from an overly ambitious target.

In a briefing to the IMF, FBR officials explained that due to lower-than-expected economic growth and a declining inflation rate, the current fiscal year may witness a shortfall of around Rs1,170 billion.

Read more: IMF demands Pakistan to raise Rs430 billion in new taxes

Therefore, they advised against increasing the next fiscal year’s tax target by more than Rs2,000 billion.

As part of its revenue generation plan, FBR has also proposed allowing the import of used vehicles up to five years old.

The move, they argue, could significantly boost customs revenue by levying higher duties on such imports.

On May 16, official sources reported that the International Monetary Fund (IMF) has urged Pakistan to increase tax revenues by Rs430 billion to set an ambitious Rs14.3 trillion tax collection target for the upcoming 2025–26 federal budget.

This recommendation was made during the second round of virtual negotiations between the IMF and the government, where detailed discussions centered around revenue targets and fiscal policy.