IMF urges Pakistan to reform tax system ahead of budget 2026-27

ISLAMABAD: The International Monetary Fund (IMF) has called on Pakistan to simplify its tax system ahead of fiscal year 2026-27 budget, ARY News reported on Monday, citing official documents.

The IMF has recommended that the strategy to simplify the tax system be implemented by May 2026.

The Fund suggested reducing tax exemptions provided to various sectors. The recommendations also include lowering special regimes, heavy withholding taxes, and advance taxes.

The IMF recommended limiting the powers of the Federal Board of Revenue (FBR) to create its own rules and suggested issuing an annual report on the progress of FBR’s implementation of these recommendations.

The Fund further recommended improving the organizational structure of the FBR, reducing the powers of FBR’s field offices, and enhancing accountability in FBR operations.

Additionally, the IMF advised that audit findings related to payroll be issued within one year.

In a separate development, the Executive Board of the International Monetary Fund (IMF) is scheduled to meet today (Monday), with Pakistan expecting approval of around $1.2 billion, according to official information.

The IMF has released its board calendar for 8 to 14 December, confirming that Pakistan’s case is included in the agenda. The Fund said the board will review the staff-level agreement reached recently with Islamabad.

According to the IMF, the board may authorise the release of a $1 billion tranche under the current loan programme.

In addition, Pakistan could receive the first $200 million instalment from the Resilience and Sustainability Facility (RSF), designed to support climate-related initiatives.

Final approval will depend on the board’s deliberations during the meeting.