Pakistan commits to tax simplification strategy with IMF by May 2026

Pakistan has committed to publishing a tax simplification strategy by May 2026 as part of its reform programme with the International Monetary Fund (IMF). The proposed strategy aims to streamline the tax system by reducing multiple rate schedules and special regimes, limiting advance and withholding taxes and rationalising tax exemptions, The News reported.

Officials said the plan will also include an annual report detailing progress on implementation and the impact of the reforms.

Under the proposed framework, the Ministry of Finance will establish criteria to review structural tax rules and ensure that any statutory regulatory orders affecting tax policy or administration are submitted to the Tax Policy Office (TPO) for review and approval.

The review process will apply to orders issued by government ministries, authorities and institutions, including the Special Investment Facilitation Council and the Board of Investment.

To align institutional roles in tax policymaking, amendments have been introduced to distinguish the mandate of the Tax Policy Office from other bodies such as the Federal Board of Revenue’s International Centre for Tax Excellence and the Tax Policy Board.

The government has also set key performance targets for the reform process. These include amendments to the Federal Board of Revenue Act 2007 to remove the Policy Board’s policymaking role and changes to the Income Tax Ordinance 2001 to eliminate policymaking provisions related to the International Centre for Tax Excellence.

Authorities also plan to enact legislation giving the Tax Policy Office statutory status, outlining its responsibilities, transparency requirements and reporting framework. Rules and regulations for the office are expected to be notified by June 2026.