Islamabad: The International Monetary Fund (IMF) has urged the Government of Pakistan to eliminate all exemptions on sales tax, according to sources familiar with the discussions.
The IMF mission is holding its final day of budget negotiations with the Federal Board of Revenue (FBR), with a total of three meetings scheduled for today.
Sources indicate that the IMF is insisting on a revenue target of PKR 15,264 billion for the next fiscal year, while FBR officials are seeking to lower the target. The IMF is also demanding PKR 778 billion be allocated under enforcement measures and PKR 430 billion from new taxes. FBR officials are expected to brief the IMF mission on where the new taxes would be applied.
While the FBR has agreed with the IMF to set the revenue target at 11.2% of GDP, detailed discussions regarding sales tax are still underway.
According to sources, the IMF has specifically called for the removal of all sales tax exemptions and for a uniform application of the tax. The fund has proposed reducing the current sales tax rate from 22.8% to 18% across all sectors.
These discussions form part of the ongoing negotiations between Pakistan and the IMF ahead of finalizing the budget for the upcoming fiscal year.
