The International Monetary Fund (IMF) has urged Pakistan to eliminate all sales tax exemptions as discussions continue with the Government of Pakistan over the upcoming federal budget.
According to official sources, an IMF mission is in the final phase of negotiations with the Federal Board of Revenue (FBR), with three separate meetings scheduled as both sides work toward agreement on revenue targets and tax reforms.
The IMF is reportedly pushing for a federal revenue collection target of Rs. 15,264 billion for the next fiscal year, while the Federal Board of Revenue is seeking a downward revision.
Sources say the IMF has also proposed Rs. 778 billion in enforcement measures and additional taxes worth Rs. 430 billion, as part of efforts to strengthen revenue collection. The FBR is expected to present proposals for potential new tax areas during ongoing talks.
Both sides have tentatively agreed on setting the tax-to-GDP ratio at 11.2 percent for the upcoming fiscal year, though detailed discussions are still underway.
The IMF has called for the removal of all sales tax exemptions and recommended moving toward a uniform sales tax system to broaden the tax base.
It has also suggested reducing the sales tax rate from 22.8 percent to 18 percent while expanding the overall tax net, aiming to improve efficiency and compliance in Pakistan’s taxation structure.
Negotiations between the IMF and Pakistani authorities are expected to continue as the budget framework is finalized.
