The International Monetary Fund (IMF) has officially rejected the Federal Board of Revenue's (FBR) request to reduce transaction taxes for the property sector, as reported on March 24, 2025. Initially, there were indications that the IMF might agree to a 2% reduction in the withholding tax on property purchases starting April 1, 2025, contingent upon formal approval. However, the IMF has now clarified that it will not approve any reduction in these transaction taxes at this time.

In addition to denying the request for property tax reductions, the IMF also refused to lower tax rates for tobacco and beverages. This decision comes amidst ongoing negotiations between Pakistan and the IMF as they work towards finalizing a Staff Level Agreement (SLA).

As part of these negotiations, Pakistan must provide written assurances that provincial governments will not interfere in wheat procurement activities.

The IMF has expressed its willingness to enhance the existing $7 billion Extended Fund Facility (EFF) by incorporating climate finance through the Resilience and Sustainability Facility (RSF).

This proposal could potentially secure up to $1 billion for climate-related initiatives and will be presented to the IMF Executive Board for approval alongside Pakistan's request for the release of the second tranche of funding.

The FBR is expected to face significant challenges in meeting its revenue collection target of PKR 1,220 billion for March 2025 due to fewer working days caused by Eid-ul-Fitr holidays.

Internal assessments suggest a shortfall of PKR 60 to 80 billion, leading the FBR to propose that this shortfall be adjusted in the targets for April and May instead of June.

ANI