Tax Reforms Accelerating in Pakistan, Agriculture Income Tax and FBR Transformation

Tax Reforms Accelerating in Pakistan, Agriculture Income Tax and FBR Transformation

| 31-Jan-2025

Finance Minister Muhammad Aurangzeb confirmed that two provincial assemblies had passed legislation on agricultural income tax, with progress also being made in Sindh and Balochistan. He assured that the International Monetary Fund (IMF) was aware of these changes and recognized the efforts being made toward tax reforms.

After a meeting of the Senate Standing Committee on Finance and Revenue, Aurangzeb announced that the federal cabinet had approved the separation of tax policy and revenue collection functions. Starting from the next fiscal year, a specialized policy unit will be set up under the Ministry of Finance, while the Federal Board of Revenue (FBR) will focus exclusively on tax collection.

This shift signifies that the FBR will no longer create tax policy, in accordance with IMF requirements.

The finance minister emphasized the government's ongoing efforts to strengthen tax collection systems and noted that the FBR’s transformation plan would work to bring non-filers into the tax net. The tax-to-GDP ratio reached 10.8% in the second quarter of the fiscal year, exceeding the target of 10.6%, though still falling short of the IMF-mandated 13.6%.

Aurangzeb reaffirmed the government's commitment to implementing reforms, with agricultural taxation and revenue generation being primary focuses. He assured the committee that all necessary steps were being taken to improve fiscal stability while ensuring transparency in administrative procedures

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