In Response to IMF Requirements, Pakistan Unveils Updated Tax Plan.
The caretaker government is taking proactive measures to address potential shortfalls in the annual tax target by formulating a contingency plan that effectively amounts to a mini-budget. The government aims to generate over Rs 18 billion per month through strategic tax measures. Reports from the media reveal that the contingency plan includes various measures such as imposing an additional tax of Rs 5 per kg on sugar, increasing the GST rate on textile and leather products to 18 percent, and raising taxes on the import of machinery and raw materials. There are also considerations to enhance taxes on the import of machinery, raw materials, supplies, services, and contracts.
Moreover, the government plans to raise its tax and petroleum development levy target for the upcoming financial year to Rs 11,000 billion, a significant increase from the current target of Rs 1590 billion.
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In addition, the annual target for the Petroleum Development Levy is expected to increase from Rs 918 billion to Rs 1065 billion, resulting in an additional levy of Rs 49 billion this year and Rs 147 billion next year.
This comprehensive plan has been communicated to the International Monetary Fund (IMF) as part of the caretaker government’s efforts to secure a bailout package. With the IMF expressing previous concerns about Pakistan’s fiscal deficit, the government is optimistic that these proposed tax hikes will contribute to narrowing the deficit.
