Pakistan Makes Major Breakthrough in IMF Talks: Mini-Budget and GST on Fuel Avoided

Jeddah - Saudi Arabia

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In a significant development during negotiations between Pakistan and the International Monetary Fund (IMF), Federal Board of Revenue (FBR) officials have assured that there will be no mini-budget, and no General Sales Tax (GST) will be imposed on petroleum products.

According to FBR sources, the annual tax target of PKR 12.97 trillion will remain unchanged, and the IMF has expressed satisfaction with Pakistan's tax revenue growth, as the tax-to-GDP ratio has increased from 8.8% to 10.3%.

FBR sources added that the IMF is pleased with the 1.5% improvement in the tax-to-GDP ratio, and that tax collection on agricultural income is set to begin next year. Additional talks with the IMF are expected, including discussions on possible adjustments to business-friendly schemes.

The FBR has also disclosed that PKR 12 billion was collected from retailers over the past three months, and 400,000 new taxpayers filed returns, raising the number of registered taxpayers from 200,000 to 600,000.

Moreover, the FBR announced that enforcement powers have been removed from the Customs Intelligence and Investigation Department, though the department itself remains active. The FBR is also set to introduce a new family income tax return, which will reduce zero-tax filings, as many filers fall outside tax eligibility criteria.

An ordinance on amended tax laws has been submitted to the Prime Minister, and is expected to be ratified soon after the President’s signature. Meanwhile, the FBR has intensified efforts to address tax evasion by companies and larger institutions.

Sources indicated that the FBR plans to arrest chief financial officers (CFOs) from companies involved in sales tax evasion or improper use of input tax adjustments.

The IMF also expressed satisfaction with the Benazir Income Support Program’s (BISP) performance. A briefing was provided to the IMF delegation, covering financial assistance provided to beneficiaries during the first four months of the current fiscal year, particularly in light of economic challenges