The International Monetary Fund (IMF) has called for a crackdown on tax evasion in Pakistan’s real estate sector as negotiations begin for the release of a $1 billion loan tranche in Islamabad.
This demand is part of the ongoing discussions aimed at securing the next tranche of the $7 billion loan program.
Pakistan has assured the IMF that it will activate the Real Estate Regulatory Authority (RERA) to address tax evasion in the sector.
As part of the plan, authorities intend to take action against individuals involved in declaring false property values, with penalties including imprisonment and fines.
Agents failing to register properties could face fines of up to Rs 500,000, while those providing false information could be fined between Rs 200,000 and Rs 500,000.
The Real Estate Regulatory Authority will be empowered to impose prison sentences of up to three years.
The negotiations for the loan tranche will continue until March 15, 2025, and are divided into two phases: technical discussions in the first phase, followed by policy-level talks.
During this time, the IMF delegation is expected to meet with officials from Pakistan’s Ministry of Finance, the Federal Board of Revenue (FBR), the Power Division, and the State Bank of Pakistan.
The IMF will also be briefed on agricultural income taxes, property sector taxation, and plans to bring retailers into the tax net.
Additionally, the IMF delegation will provide suggestions for the upcoming fiscal year’s budget, and separate discussions will be held with representatives from Punjab, Sindh, Khyber-Pakhtunkhwa, and Balochistan.