IMF urges Pakistan to recover PKR 3,700bn additional revenue from 3 sectors

The International Monetary Fund (IMF) has advised Pakistan's tax collection authority — Federal Board of Revenue (FBR) — to recover PKR 3.7 trillion ($13.2 billion) additional revenue from retail, transport, and real estate sectors through enforcement measures, sources told Nuktaon Tuesday.

During a meeting with FBR officials, IMF team mentioned that these three sectors were undertaxed and had the potential to generate revenue to the tune of PKR 3,700 billion, which is about 3.5% of the country’s GDP.

IMF and Pakistan's tax officials held a meeting on Tuesday to discuss a revenue shortfall of PKR 192 billion in the first four months of the current fiscal year.

During the meeting, FBR officials presented tax revenue statistics, revealing that they had collected PKR 3,440 billion against a target of PKR 3,632 billion from July to October, resulting in a shortfall of PKR 192 billion.

FBR officials briefed the IMF team about their transformation plan, which includes enforcement measures such as banning non-filers from acquiring major assets and implementing anti-smuggling initiatives.

Tax on traders

The IMF team mentioned Pakistan had the potential to collect around PKR 16,000 billion in taxes, but currently, the tax department is collecting around PKR 9,200 billion. The IMF team also expressed concerns about the failure to collect taxes from traders.

Additionally, the IMF has asked Pakistan to meet the conditions of implementing a compliance risk management framework in the markets of Islamabad, Karachi, and Lahore by the end of December.

Previously, an IMFs report highlighted several recommendations for Pakistan to address its fiscal challenges and improve revenue collection, focusing on broadening the tax base, removing special sectoral regimes, and ensuring a fairer distribution of the tax burden, particularly on traditionally undertaxed sectors.

According to the Finance Ministry, the IMF team, led by Mission Chief Nathan Porter, met with Finance Minister Muhammad Aurangzeb to review Pakistan’s economic performance in their introductory session.