FBR to introduce new fossil fuel surcharge to boost revenue

Pakistan targets 13.7% tax-to-GDP ratio by 2028-29 under IMF program

The Federal Board of Revenue (FBR) plans to implement a new surcharge on fossil fuels as part of its efforts to raise additional revenue. This measure aligns with Pakistan’s commitment to the International Monetary Fund (IMF) to achieve a tax-to-GDP ratio of 13.7% by fiscal year 2028-29. 

According to a news report, the FBR revealed that this target will be met through the new surcharge, expanding provincial tax bases, and increasing non-tax revenues for the federal government.

Under a framework agreed upon with the IMF, the FBR is expected to contribute 11.1% of the tax-to-GDP ratio through strengthened policy and enforcement efforts. Supported by the World Bank, the FBR is advancing a Revenue Mobilization Program to implement these reforms.

The Medium-Term Fiscal Framework (MTFF) includes a series of reforms designed to widen revenue sources at both federal and provincial levels. 

Key initiatives involve eliminating preferential tax treatments, extending Personal and Corporate Income Tax (PIT and CIT) to previously untaxed sectors, and raising the top tax rate to 45%. 

The FBR also plans to simplify PIT for salaried and non-salaried individuals, expand the federal excise duty (FED), and overhaul income tax and withholding tax rules related to motor vehicle registrations.

Monitoring Desk
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