The International Monetary Fund (IMF) has called on Pakistan to increase its tax recovery efforts in the retail, real estate, and agriculture sectors, ARY News reported today. This development comes as part of the ongoing review of Pakistan's $3 billion Standby Arrangement (SBA) with the IMF. The Federal Board of Revenue (FBR), authorized to implement a fixed tax scheme on retailers after December, has submitted its revenue projection report to the IMF and is awaiting a response by Saturday.
The IMF's recommendations include stricter taxes on real estate and retail sectors in case of a revenue shortfall. The FBR has conducted necessary consultations with provinces for agricultural taxation and briefed the IMF on the Tax Policy and Management Task Force's initiatives and potential amendments. The FBR also submitted an end-of-financial-year revenue report to the IMF, with the lender's mission expected to respond in two days.
During technical discussions this week, Pakistan agreed to share data on tax evaders from sectors with lesser tax recovery. This agreement was reached during policy review talks for a possible release of a $700 million SBA loan tranche.
Last week, Pakistan began the first review negotiations of its SBA with the IMF, which suggested implementing taxes on retail, real estate, and agriculture sectors to bridge financing needs. Depending on Pakistan's performance in enhancing tax recovery, the IMF might disburse a second tranche of $700 million. The IMF has also endorsed issuing Sovereign Bonds for financing as it continues to play its role as a crisis lender to ensure economic stability.
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