ISLAMABAD: Prime Minister Shehbaz Sharif is making a push to convince the International Monetary Fund (IMF) to allow a downward revision of the Federal Board of Revenue’s (FBR) tax collection target for the upcoming fiscal year 2025–26 (FY26), sources confirmed.
According to details, the government has proposed a Rs250 billion cut, revising the tax target from the previously projected Rs14,307 billion to Rs14,057 billion. Formal discussions are underway with the IMF to seek approval for the revision.
The rationale behind the proposed reduction is to avoid the imposition of new taxes while maintaining a realistic revenue outlook, given the slower-than-expected economic growth and declining inflation that have constrained tax buoyancy.
FBR officials, in their briefing to the IMF, highlighted a likely shortfall of Rs1,170 billion in tax collection during the current fiscal year due to these macroeconomic factors. Based on this, they advised that any increase in the FY26 tax target should not exceed Rs2,000 billion, warning that a steeper target may lead to underperformance and fiscal slippages.
As part of its broader revenue strategy, the FBR has also floated a proposal to allow imports of used vehicles up to five years old, arguing that such a move could help boost customs revenue through the imposition of higher import duties on these vehicles.
The discussions come amid ongoing talks with the IMF over a new Extended Fund Facility (EFF) programme, under which tax reforms and fiscal consolidation remain key policy conditions.
Earlier, the IMF had urged Pakistan to mobilize Rs430 billion in new taxes to meet budgetary needs, a demand that the government is now trying to soften through alternative proposals.
