Pakistan

IMF asks Pakistan to raise tax collection target from Rs 5.8 trillion to Rs 6.3 trillion

IMF tax collection target

The International Monetary Fund (IMF) has recommended Pakistan to increase its annual tax collection target from Rs 5.8 trillion to Rs 6.3 trillion by enacting additional taxing measures like as income and sales taxes, as well as regulatory duty. 

The IMF’s new demand comes amid ongoing virtual talks about losses of approximately Rs 600 billion due to non-collection of petroleum duty during the current fiscal year. 

According to the journal, the government would have to take additional income measures on the Federal Board of Revenue front to close the shortfall that has arisen as a result of the non-collection of the petroleum levy. 

The IMF also recommends raising the basic price of the power tariff to Rs 1.40 per unit in order to reduce the rise of circular debt. 

Read more: Pakistan asks IMF to reduce tax collection target to Rs 5.5 trillion

According to the publication, Pakistani authorities have made quarterly modifications to the power tariff, but if the base price is not increased, the rate of accumulation predicted under the Circular Debt Management Plan (CDMP) is unlikely to materialize.  

“Talks are underway, and both sides may reach an agreement on a staff-level agreement under which the FBR’s target for the current fiscal year could be increased from Rs 5.8 trillion to Rs 6-6.1 trillion as a result of the FBR’s increased collection at the import stage,” top official sources confirmed to the publication. 

The IMF has also proposed raising the personal income tax rate by adjusting the higher income bracket earning Rs 75 million on an annual basis, according to authorities. Various suggestions are being considered to increase the personal income tax rate from 10 percent to 15 percent in order to raise an additional Rs 100 billion to Rs 150 billion. 

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