Pakistan assures IMF to not introduce new tax amnesty scheme

Islamabad: The Federal Bureau of Revenue (FBR) prepared an implementation report for ending tax exemption as per International Monetary Fund (IMF) conditions, which has been shared with the IMF team and has assured them not to introduce a new tax amnesty scheme.

According to the media reports, technical level dialogues were held between the FBR officials and the IMF on Friday. The meeting briefed about the measures and progress made to increase the tax revenue to the IMF, refund payments, phasing out of tax exemptions and increase in the tax base.

FBR submitted a report on the implementation of IMF conditions, which stated that target of income tax refunds payments has been achieved from July to September 2023. The income tax refunds payments were to be limited up to Rs250 billion till September, however were capped at Rs200 billion. The income tax refunds payments are being reduced gradually. FBR did not waive tax during the first quarter while in the loan program

The report stated that the implementation of IMF conditions on revenue target, refund payments and tax exemptions is underway. The IMF team was informed that FBR has collected more than Rs2041 billion in first quarter July to September. Compared to last year, there was a 23% growth and Rs397 billion more taxes were collected including income tax Rs934 billion, sales tax Rs727 billion, excise duty Rs127.58 billion. The refunds of more than 128 billion rupees were also issued till September.

In three months, more than 252 billion rupees were collected as customs duty. An additional Rs246 billion were collected in the form of income tax. Rs82 billion more revenue was collected in sales tax. There was Rs48.46 billion growth in federal excise duty and more than Rs20 billion in customs duty.

In the first four months, Rs590 billion more than last year i.e. Rs2,748 billion tax revenue was collected and they are determined to achieve the tax target of 9,415 billion rupees for the current financial year.

The FBR shared revenue sources with the IMF to meet the tax collection target of Rs90.4 trillion, raising objections from the fund's staff due to low revenue from sales tax and customs duty identified potential risks of deficiency.

The top FBR officials tried their best to convince the IMF that they will meet the revenue target of Rs90.4 trillion by June 2024, as it has already collected the target of 66 billion rupees from July to October.

IMF mission is still not fully convinced that the FBR will achieve its tax target of Rs90.4 billion, but the fund's staff did not provide any figures on their behalf during the talks.

Regarding the possible demand for additional revenue from the IMF, the FBI has taken the position that the Law Ministry under the caretaker government has opposed any fresh presidential ordinance to raise tax revenue.