The federal government of Pakistan has reached an agreement with the International Monetary Fund (IMF) to implement seven new taxation measures during the fiscal year 2024-25 if revenue collection falls short of the projected target by 1 per cent in the current fiscal year.
According to the IMF’s “Extended Arrangement under the Extended Fund Facility (EFF)” report, these contingent revenue measures are aimed at bolstering fiscal strength.
The Federal Board of Revenue (FBR), in consultation with IMF staff, will evaluate the adoption of the following measures if the three-month rolling average of revenue falls below expectations:
- Advance Income Tax on Imports: A 1 percentage point increase on the import of machinery and raw materials by both industrial undertakings and commercial importers, with an expected monthly revenue of Rs6.5 billion.
- Withholding Tax Adjustments: A 1 percentage point increase on supplies, services, and contracts, generating an additional Rs2 billion monthly.
- Excise Duty on Sugary Drinks: A 5 percentage point increase in federal excise duty on aerated and sugary drinks, aiming to collect Rs2.3 billion monthly.
These taxation measures, if activated, will target key sectors of imports, services, and consumables to prevent a significant shortfall in revenue during the fiscal year.
