Islamabad: The International Monetary Fund (IMF) has proposed higher taxes on solar panels and electric vehicles (EVs) in Pakistan’s upcoming FY2027 budget as part of ongoing efforts to boost revenue and strengthen fiscal discipline.
According to Beyond Time News, the proposals were discussed during recent budget talks between the IMF mission and Pakistani authorities.
Broad Agreement on Revenue Measures
Finance Ministry sources said Pakistan and the IMF have reached an understanding in principle on tax measures worth around Rs1,100 billion at federal and provincial levels for the next fiscal year.
The federal government is expected to introduce nearly 230 new tax measures aiming to generate about Rs370 billion, while provinces are expected to contribute around Rs430 billion through additional taxation steps.
Higher Taxes on Green Energy and EVs
The IMF has recommended increasing sales tax on solar panels from 10% to 18% starting July 1.
It has also proposed raising the sales tax on electric vehicles from 1% to 18%.
The proposed changes are intended to widen the tax base and improve overall revenue collection.
FBR Sets Rs15.264 Trillion Target
The Federal Board of Revenue (FBR) has been given a tax collection target of Rs15.264 trillion for FY2027.
For the first half of the fiscal year ending December 2026, the target stands at Rs7.022 trillion.
Additional expected revenue includes:
- Rs95 billion from tax audits
- Rs50 billion from sectors such as sugar, cement, tobacco, and fertilizer
Energy and Fiscal Conditions
Sources said the IMF has maintained its requirement for periodic reviews of gas and electricity tariffs.
It has also opposed new tax exemptions for Special Economic Zones and recommended phasing out existing incentives by 2035.
Separately, the IMF has proposed an 18% increase in the petroleum levy target, which could generate an additional Rs262 billion.
IMF Raises Concerns Over Low Farm Income Tax
IMF Calls Talks Constructive
In its post-talks statement, the IMF described discussions with Pakistani authorities as “constructive,” covering:
- Budget planning
- Fiscal reforms
- Economic outlook
- External and geopolitical risks
- Progress under the Extended Fund Facility (EFF) and RSF
Pakistan reiterated its commitment to a 2% of GDP primary surplus target for FY2027.
Conclusion
The IMF’s proposal to increase taxes on solar panels and electric vehicles signals tighter fiscal conditions for Pakistan’s FY2027 budget.
According to Beyond Time News, the measures are part of broader efforts to expand the tax base and support long-term economic stability under the IMF programme.
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