IMF Rejects Pakistan Property Tax Cut Proposal

The International Monetary Fund (IMF) has turned down the Federal Board of Revenue’s (FBR) request to lower transaction taxes on property for now, according to The News.

Earlier, senior officials had suggested that the IMF was on board with reducing the withholding tax for property buyers by 2%, starting April 1, 2025, once officially approved. However, the IMF has now made it clear that it won’t support this tax cut. Mahir Binci, the IMF Resident Chief in Pakistan, stated that no agreement was made to reduce the property withholding tax or to ease the FBR’s tax collection goal for March 2025.

The IMF also said no to proposals for cutting taxes on tobacco and beverages.

Pakistan and the IMF are still negotiating toward a Staff Level Agreement (SLA), with Pakistan needing to promise that its provincial governments won’t buy wheat.

The IMF wants to add climate funding to the existing $7 billion Extended Fund Facility (EFF) through something called the Resilience and Sustainability Facility (RSF). This could bring in up to $1 billion for climate projects and will be submitted to the IMF Executive Board for approval along with the second tranche of funds.

Finance Minister Muhammad Aurangzeb remains hopeful that an agreement is near.

The FBR is likely to miss its Rs 1,220 billion target for March because of fewer working days due to Eid-ul-Fitr holidays. They’ve asked to shift this shortfall to the targets for April and May 2025, instead of the fiscal year-end in June.