IMF pushes for higher provincial revenue targets in Pakistan

The International Monetary Fund (IMF) has increased the provincial tax collection target by 64 per cent for the upcoming fiscal year, ARY News reported on Tuesday, quoting official documents.

Under the IMF-supported programme, provincial revenue authorities have been tasked with collecting Rs1,947 billion in the 2026–27 financial year.

This marks a significant rise from the estimated Rs1,190 billion in the current fiscal year, reflecting an additional target of Rs757 billion.

The documents indicate a phased revenue collection plan for the provinces. By September 2026, provincial tax revenues are expected to reach Rs389 billion, rising to Rs798 billion by December 2026. The target further increases to Rs1,285 billion by March 2027.

The plan forms part of broader fiscal reforms in Pakistan, aimed at strengthening the role of provinces in revenue generation under the IMF programme.

Meanwhile, tax relief for the electric vehicle sector may also be withdrawn. The sales tax exemption on CKD kits for electric vehicles is expected to expire on July 1, 2026, while the reduced one percent sales tax on locally manufactured or assembled electric vehicles will remain in place only until June 30, 2026.

Similarly, the concessional sales tax regime for hybrid electric vehicles is set to expire at the end of the current fiscal year, with no further extension currently under consideration.

Sources said the sales tax exemption on electricity supply to tribal areas will remain effective until June 30, 2026, while the tax exemption available on locally manufactured silos is also expected to end on the same date.

In another revenue-enhancing measure, the government is likely to double the Climate Support Levy on petroleum products from July 1, 2026. The levy is expected to increase from Rs2.5 per litre to Rs5 per litre.

Officials estimate that the Climate Support Levy could generate more than Rs90 billion in revenue during the next fiscal year.