Negotiations on the first review of Pakistan’s $3 billion Standby Arrangement have turned up the heat as the International Monetary Fund (IMF) has called for the imposition of taxes on the retail, real estate, and agricultural sectors, Federal Bureau of Revenue (FBR) sources told ProPakistani.
Technical-level talks between Pakistan and the IMF are ongoing and many critical avenues for bridging financing needs have been identified.
The IMF has particularly suggested stricter enforcement of real estate tax. Also, in case of a shortfall in tax revenue, a fixed tax may be imposed on retailers during the ongoing financial year. The lender has recommended that the tax regulator may exercise its powers to levy tax on retailers after December, FBR sources added.
It was briefed that consultation with provinces is mandatory for imposing taxes on the agricultural sector. Meanwhile, FBR has submitted a report to the IMF on potential revenue by the end of the current financial year. The lender’s mission will respond to the revenue report in two days, sources added.
Notably, the IMF was also briefed on the Tax Policy and Management Task Force under the purview of the tax regulator.
Talks with the IMF commenced late last week with both sides sharing critical data for fast-tracking the ongoing review. If the lender is satisfied with Pakistan’s performance during the review, a second tranche of $700 million is expected to be disbursed.
The successful outcome of the review will undoubtedly have far-reaching implications for the country’s economic stability and its ability to secure continued financial support from the crisis lender.
Source: Pro Pakistani