The International Monetary Fund (IMF) has conducted a detailed study of Pakistan’s existing tax system and made recommendations, including a string of policy proposals from the rationalisation of tax rates to withdrawal of tax exemption and removal of all distortions in the country’s tax system.
According to a report by Dawn which quotes a source in the Federal Board of Revenue (FBR), the report is confidential but covers all most all areas of the tax system with policy recommendations that will be considered and implemented in the next budget.
The report has flagged many areas which the mission believes is not in conformity with the international best practices and made recommendations related to sales tax.
The government, however, is of the opinion that it will have an adverse impact. At the moment, the focus will be to review corporate income tax exemptions and concessions.
The report also highlights distortions in the tax system from multiple tax rates to concessions to one class while burdening others with high tax rates, further recommending the elimination of all kinds of distortions.
Earlier on Saturday, the Ministry of Finance had clarified that Pakistan was closely engaged with the IMF to bring the review work to completion without delay in response to an article published in Financial Times regarding Pakistan’s IMF programme.
In a tweet, the ministry dispelled the erroneous impression conveyed by an article published in Financial Times.
The ministry said that the contention in the article appeared to derive from the personal views of some individuals, while the actual position was never solicited from the government, adding that Pakistan remained firmly committed to its agenda of fiscal stabilisation and economic reforms.
We would like to dispel the erroneous impression conveyed by an article in @FinancialTimes regarding Pakistan’s IMF Program.The contention in the article appears to derive from the personal views of some individuals,while the actual position was never solicited from the Govt 1/2
— Ministry of Finance (@FinMinistryPak) November 21, 2020
“In this context, it is clarified that Pakistan is closely engaged with the Fund to bring the review work to completion without delay. Pakistan remains firmly committed to its agenda of fiscal stabilisation and economic reforms,” the ministry tweeted.
In this context, it is clarified that Pakistan is closely engaged with the Fund to bring the review work to completion without delay. Pakistan remains firmly committed to its agenda of fiscal stabilisation and economic reforms 2/2
— Ministry of Finance (@FinMinistryPak) November 21, 2020
It is expected that Pakistan can potentially get relief worth $915 million, including $273 million in interest payments during January-June 2021 period.