Cabinet Delays Solar Policy, Approves Tax Reforms and IMF Deal Boost

On Wednesday, Pakistan’s federal cabinet, led by Prime Minister Shahbaz Sharif, put the brakes on approving a new solar net metering policy after facing pushback from multiple members, including the PM himself. The meeting saw Sharif direct the Power Division to rework the proposal, which had aimed to slash the solar buyback rate from Rs. 27 per unit to Rs. 8-9 per unit—a move meant to ease grid costs but criticized for stalling solar adoption. The cabinet opted to delay the decision, sending it back for revisions to better balance renewable energy goals with economic realities.

For tax law firms, this opens a dual front. The policy rethink could affect tax incentives tied to solar investments, a growing area for client advice as Pakistan pursues green energy. Meanwhile, the cabinet’s nod to the IMF’s staff-level agreement—securing a $7 billion Extended Fund Facility review and an extra $1.3 billion for climate initiatives—signals fiscal tightening and potential tax policy shifts. Sharif hailed this as a financial lifeline, and it’s a cue for tax experts to prep clients for compliance and optimization under IMF-driven reforms.

The meeting also delivered tax-relevant wins. Electricity price cuts, funded by cheaper petroleum, were approved, alongside new CPPA deals with bagasse-fired plants—both hinting at energy tax adjustments worth monitoring. The Whistleblower Protection and Vigilance Commission Act, 2025, got the go-ahead, promising tighter transparency rules that could reshape corporate tax reporting. Amendments to Islamabad’s tax laws under the Resource Mobilization and Utilization Reform Program were cleared, and the Income Tax (Second Amendment) Bill, 2025, was ratified, bringing back tax rebates for full-time teachers and researchers—a boon for education-sector clients.

Sharif underscored a focus on lasting economic stability, calling for unity to drive growth. For tax firms, this mix of delays and approvals—from solar policy flux to IMF funds and tax tweaks—means a busy season ahead, advising businesses and individuals navigating these changes.