IMF Rejects FBR’s Tax Relief Plans for Property, Tobacco, and Beverages

ISLAMABAD: The International Monetary Fund (IMF) has denied the Federal Board of Revenue (FBR)’s request to lower taxes on property transactions, contradicting earlier government claims that a 2% cut in withholding tax on real estate purchases would take effect from April 1, 2025.

Additionally, the IMF remains firm against reducing taxes on tobacco and beverages. The federal government must also provide written assurances that provinces will refrain from wheat procurement in case of a supply shortage.

Despite these restrictions, the IMF has shown openness to expanding Pakistan’s $7 billion Extended Fund Facility (EFF) with climate-focused financial assistance under the Resilience and Sustainability Facility (RSF). Though the final figure remains uncertain, previous estimates suggest Pakistan may receive up to $1.2 billion for a Climate Resilience Fund (CRF).

IMF Resident Representative Mahir Binci confirmed that no agreement has been made to lower withholding taxes on property transactions or modify Pakistan’s tax collection targets for March 2025. As a result, the FBR is likely to fall short of its Rs1,220 billion revenue target this month. To manage the deficit, officials are considering shifting the shortfall to April and May rather than pushing it to June.