The International Monetary Fund (IMF) has turned down the Federal Board of Revenue’s (FBR) request to reduce property transaction taxes. Initially, officials had expected a 2% reduction in withholding tax on property buyers starting from April 2025. However, the IMF confirmed that it will not approve the reduction at this time.
In addition to rejecting the property tax cut, the IMF also declined requests to lower taxes on tobacco and beverages. The IMF emphasized that these decisions are crucial for Pakistan’s ongoing negotiations to meet fiscal goals. These discussions are part of the ongoing efforts to finalize a Staff Level Agreement (SLA).
The IMF has made it clear that Pakistan must provide assurances that provincial governments will not engage in wheat procurement. Furthermore, the IMF is working on expanding Pakistan’s $7 billion Extended Fund Facility (EFF) to include climate finance through the Resilience and Sustainability Facility (RSF). This expansion could potentially secure up to $1 billion in funding for climate-related initiatives.
Meanwhile, Pakistan’s FBR is facing challenges in meeting its tax targets. The agency is expected to fall short of its Rs 1,220 billion target for March due to fewer working days from the Eid holidays. The FBR has requested that this shortfall be accounted for in the April and May targets instead of the end-of-year goal.