ISLAMABAD: The International Monetary Fund has asked Pakistan to withdraw all exemptions and concessions on sales tax as budget negotiations with the Federal Board of Revenue (FBR) enter the final phase, sources said on Monday.
According to officials, the IMF mission has demanded the complete removal of all sales tax exemptions. Detailed talks on the issue are scheduled for later today.
The IMF delegation and Federal Board of Revenue officials are expected to hold three key meetings to discuss tax collection targets, new revenue measures, and fiscal strategy for the next financial year.
The IMF is pressing Pakistan to set a tax collection target of Rs15.264 trillion for the upcoming fiscal year, while the FBR is seeking a lower target, sources said.
Officials said the IMF has also asked Pakistan to generate an additional Rs778 billion through enforcement measures.
According to sources, the government is considering new tax measures worth Rs430 billion in the upcoming budget. FBR officials are expected to brief the IMF mission in detail on the proposed measures to finalise revenue targets and taxation plans.
Sources further said the IMF and the FBR have agreed to keep the tax-to-GDP ratio target at 11.2 percent.
Also Read: IMF Tightens Economic Reform Agenda for Pakistan
Separately, the IMF has proposed reducing the current sales tax rate from 22.8 percent to 18 percent, but it continues to insist on the removal of all exemptions and special concessions.
