IMF demands Pakistan to raise Rs430 billion in new taxes

ISLAMABAD: 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, according to official sources.

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.

The IMF emphasized the need for urgent action to broaden the tax base, including swift resolution of tax-related court cases and the implementation of stronger enforcement measures.

The Fund proposed a significant increase in tax revenue, suggesting that Pakistan set a tax collection target of Rs 14.3 trillion for the next fiscal year with an additional taxes of Rs 430 billion to be generated through new taxation measures.

IMF also suggested that Rs600 billion can be raised solely through enforcement actions.

Finance Minister Muhammad Aurangzeb briefed the IMF delegation on the country’s economic performance and the challenges government is facing in achieving the tax collection.

Due to sluggish growth and persistent inflation, government estimates suggest that revenue collection may be limited to Rs 13.275 trillion. However Rs1.03 trillion could be collected through enforcement and policy reforms.

The IMF has also urged the government to increase documentation of high-potential sectors including tobacco, beverages, and real estate, while recommending improvements in real-time data collection and automation within the Federal Board of Revenue (FBR).

The meeting also discussed enhancing FBR’s production data monitoring and improving documentation.

Read More: IMF demands action against tax evasion in Pakistan’s real estate sector

Earlier, International Monetary Fund (IMF) demanded a crackdown on tax evasion in Pakistan’s real estate sector, as talks to unlock $1bln loan tranche get underway in Islamabad, ARY News reported on Monday, citing sources.

The nine-member mission led by Nathan Porter landed in Pakistan today to assess Pakistan’s economic performance to determine the release of the next $1 billion tranche.

As per details with ARY News by sources, the talks got underway between Pakistan and IMF to $1 bln loan tranche under $7 bln loan program. During the talks, the IMF pushed for action against those misdeclaring property values.