IMF Urges Pakistan to Simplify Tax System
The International Monetary Fund (IMF) has called on Pakistan to simplify its tax system ahead of the fiscal year 2026-27 budget, ARY News cited official documents.
The Fund recommended implementing a tax simplification strategy by May 2026 and urged removal of many tax exemptions granted to various sectors.
IMF advice included scaling back special tax regimes, reducing heavy withholding taxes, and lowering advance tax requirements that complicate revenue collection.
The Fund suggested limiting the Federal Board of Revenue’s power to make its own rules and proposed issuing an annual report on FBR progress implementing these recommendations.
IMF officials urged reforms to the FBR’s organisational structure, curbing powers of field offices, and strengthening accountability in its operations.
It recommended audit findings related to payroll be completed and issued within one year to improve fiscal transparency.
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Separately, Pakistan expects IMF Executive Board consideration this week for financial support, with official information saying approval of around $1.2 billion could be possible.
The IMF published its board calendar for 8 to 14 December, confirming Pakistan’s case will be reviewed and noting the board will assess the staff-level agreement with Islamabad.
The Fund said the board may authorise release of a $1 billion tranche under the current loan programme and could approve a $200 million instalment from the Resilience and Sustainability Facility.
Final approval depends on the Executive Board’s deliberations during the meeting and any decisions it takes on the staff-level agreement.
Officials said a final decision will be announced following the board’s deliberations shortly.
