IMF and Pakistan step up efforts to broaden tax base

ISLAMABAD – The International Monetary Fund (IMF) has intensified its collaboration with Pakistan’s Federal Board of Revenue (FBR), focusing on tax policy improvements aimed at expanding the country’s taxpayer base. This partnership is part of a broader effort to enhance Pakistan’s fiscal stability and generate more revenue through an inclusive tax system.

A team of IMF experts arrived in Islamabad today, embarking on formal discussions with Pakistani officials. The consultations are centered on strategies to incorporate high-income earners into the tax net and separate tax administration from policy-making processes. The IMF’s push for a higher tax-to-GDP ratio is driving these reforms.

The FBR, with guidance from the IMF, is working on a Compliance Improvement Plan slated for completion by March next year. This plan includes the use of third-party data and the development of analytical tools, such as a Risk Register Report that was finalized last December. These initiatives aim to leverage financial and national identity databases to increase the number of taxpayers to a targeted 6.5 million by June 2024.

On December 7, the IMF Executive Board is expected to approve a staff-level agreement that could lead to a disbursement of $700 million to Pakistan. This sum would be part of a larger program aiming at disbursing approximately $1.9 billion cumulatively.

The joint efforts between the IMF and the FBR are set to draft amendments that will add one million new taxpayers, raising the total to six million in anticipation of the next fiscal budget. These measures are indicative of Pakistan’s commitment to reforming its tax system and ensuring sustainable economic growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.