IMF must approve every Pakistan tax proposal, revenue chief says

Pakistan's government must now obtain approval from the International Monetary Fund for every tax-related proposal it wants to implement, the country's top revenue official revealed Saturday in a development that underscores the unprecedented external oversight of the cash-strapped nation's fiscal policies.

Chairman of the Federal Board of Revenue Rashid Langrial told a Senate committee that the IMF has tightened its oversight of Pakistan's revenue framework as the South Asian country of 240 million people struggles to meet the conditions of the international bailout program designed to prevent its economic collapse.

The revelation underscores that any changes parliamentarians suggest to the government's 2025 Finance Bill currently under consideration would be meaningless without IMF approval.

"Fund approval is mandatory for every tax proposal," Langrial said during a briefing to the Senate Standing Committee on Finance and Revenue. He added that weekly enforcement meetings between Pakistani tax officials and IMF representatives will now take place to enhance tax collection.

Langrial also revealed that Pakistan's wealthiest 5% are evading taxes worth PKR 1,611 billion annually. The average annual income of the top 1% of households is PKR 10 million, he said, arguing that the focus should shift from expanding the tax net to "taxing the 5% rich effectively."

'Grave risk of misuse'

The committee examined several major policy changes, including a proposal to digitally track cargo movements and reduce the duty-free limit for courier parcels from PKR 15,000 to 500 to prevent abuse of personal-use exemptions.

But the most contentious issue was a proposed provision to grant arrest and money laundering notice powers to tax officers.

Senator Saleem Mandviwalla, the committee chairman, warned of "grave risk of misuse," saying even a minor tax officer sending such a notice "could create chaos." He emphasized that money laundering notices should require express permission from the tax board chairman and finance minister.

"This is turning Pakistan into a police state. Even taxpayers will flee," said Senator Shibli Faraz.

Senator Farooq H. Naek underscored the business impact, stating that anti-money laundering notices "can cripple a businessman's ability to import or export."

Finance Minister Muhammad Aurangzeb acknowledged the concerns, calling money laundering notices "a very serious matter" that should be reviewed carefully.

Tougher action

The committee also recommended tougher action against vehicle smuggling, proposing that cars with tampered chassis numbers be confiscated and destroyed within 30 days of seizure rather than being used for official purposes as currently done.

Senator Ahmed Khan suggested the vehicles "should be set on fire to avoid resale of parts."

Under the new proposals, vehicles with cut-and-weld modifications or re-stamped chassis numbers would be presumed smuggled even if registered with motor authorities.