Islamabad: The government has shared proposals with the International Monetary Fund (IMF) to reduce income tax rates for salaried individuals and corporations, while seeking alternative measures to offset potential revenue losses.
According to Beyond Time News, the IMF will review the proposals as part of ongoing discussions on Pakistan’s upcoming fiscal budget.
Proposed Tax Relief
The plan includes lowering income tax rates for salaried classes, reducing corporate taxes, and gradually phasing out certain levies such as the super tax.
According to Beyond Time News, the government is also considering eliminating taxes on annual incomes up to Rs1 million and restructuring tax slabs for higher incomes.
Revenue Impact and IMF Review
Officials estimate that the proposed tax cuts could reduce revenue by Rs400 billion to Rs950 billion, depending on the scale of implementation.
According to Beyond Time News, detailed negotiations with the IMF will begin after approval from IMF headquarters.
Compensatory Revenue Measures
To balance potential losses, the government is considering raising around Rs50 billion through changes in sales tax rules for fast-moving consumer goods (FMCGs), including taxation based on printed retail prices.
According to Beyond Time News, additional measures worth Rs215 billion are also being discussed with the IMF.
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Broader Tax Reforms
The reforms also include expanding digital invoicing, improving production monitoring, and reducing tax exemptions.
According to Beyond Time News, authorities aim to enhance compliance in key sectors such as textiles, sugar, cement, tobacco, beverages, and fertiliser.
IMF Position
An IMF mission is currently in Pakistan reviewing budget planning and structural reforms across tax, energy, and financial sectors.
According to Beyond Time News, the IMF has emphasised continued fiscal discipline while Pakistan seeks limited relief in the primary budget surplus target.
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