The International Monetary Fund (IMF) has officially declined the Federal Board of Revenue’s (FBR) request to reduce transaction taxes on property for the time being, The News reported.
Initially, senior officials had indicated that the IMF had agreed in principle to a 2% reduction in withholding tax on property purchasers, set to take effect from April 1, 2025, pending formal approval.
However, the global lender has now clarified that it will not approve the proposed reduction in taxes on property transactions. IMF Resident Chief in Pakistan, Mahir Binci, confirmed that the IMF had not agreed to reduce the withholding tax on property transactions, nor had it approved a reduction in the tax collection target for March 2025.
In addition to refusing the property tax reduction, the IMF also rejected requests to lower taxes on tobacco and beverages.
As Pakistan and the IMF continue negotiations, the two sides are working towards a Staff Level Agreement (SLA), but Pakistan must provide assurances that provincial governments will not engage in wheat procurement.
The IMF has also expressed its intent to expand the current $7 billion Extended Fund Facility (EFF) to include climate finance through the Resilience and Sustainability Facility (RSF).
This proposal, which could secure up to $1 billion for climate resilience efforts, will be presented to the IMF Executive Board for approval alongside the second tranche release.
Finance Minister Muhammad Aurangzeb expressed optimism that the two sides are close to reaching an agreement.
The FBR is expected to face a significant shortfall in achieving its target of Rs 1,220 billion for March due to fewer working days caused by Eid-ul-Fitr holidays. The FBR has requested that this shortfall be carried over into the April and May 2025 targets, rather than the end of the fiscal year in June.
