ISLAMABAD: The government has set its sights on raising Rs250 billion by expanding the tax net and implementing the Compliance Risk Management (CRM) framework, targeting retailers as part of a broader effort to close a massive Rs604 billion revenue shortfall in the first eight months of the current fiscal year.
The International Monetary Fund (IMF) has been reviewing these measures as part of the ongoing discussions regarding Pakistan’s fiscal performance under the $7 billion Extended Fund Facility (EFF). The IMF delegation is expected to begin formal negotiations today in Islamabad, where it will meet with Finance and Revenue Minister Mohammad Aurangzeb to review the progress of the country’s economic reforms.
To bridge the revenue gap, the government is relying on administrative measures to bring more retailers into the tax fold. The Federal Board of Revenue (FBR) is implementing the Tajir Doost Scheme, expanding the Compliance Risk Management (CRM) framework, and increasing efforts under the Compliance Improvement Plan (CIP).
The FBR has been preparing the CRM framework with the help of external services, with plans to use Artificial Intelligence (AI) to audit around 3 to 5 percent of tax returns out of the six million filed. Over time, the capacity for audits will expand. Independent auditors will also be hired to improve the system’s effectiveness. Currently, CRM measures have been rolled out in the Large Taxpayers Units (LTU) in Islamabad, Karachi, and Lahore, with further plans for expansion.
To support this initiative, the FBR has integrated data from 145 agencies through Memorandums of Understanding (MoUs) under Pakistan’s documentation law. Additionally, digital invoicing, track-and-trace systems, and stricter controls are being introduced to combat tax fraud and evasion.
The FBR is also working on improving the track-and-trace system to ensure better oversight of the supply chain, incorporating aggregation to monitor each step of the process. Along with these measures, the IMF will review Pakistan’s tax penalty regime to assess its impact and effectiveness. The findings will help shape a General Anti-Avoidance Rule (GAAR) aimed at curbing tax avoidance.
In addition to discussions about tax measures, the IMF review mission will evaluate Pakistan’s economic performance for the first half of the fiscal year (July-Dec). This will include assessing any necessary adjustments to the macroeconomic and fiscal framework for the remainder of the year. A key issue in these talks will be setting the parameters for the 2025-26 budget. If both sides fail to reach a consensus, the discussions may continue until Parliament approves the next budget.
On another front, the government is implementing significant reforms in the power sector. Federal Minister for Power Sardar Awais Ahmed Khan Leghari reassured international development partners that negotiations with independent power producers (IPPs) are proceeding transparently. He highlighted efforts to reduce electricity costs and improve affordability for both consumers and industries.
Leghari emphasized several key reforms, including reducing the country’s electricity generation capacity by 7,000MW, eliminating furnace oil-based plants, and transitioning from “Take or Pay” contracts to “Take and Pay” arrangements. The government is also pushing for privatization of power distribution companies (Discos) and introducing new regulatory frameworks for Special Economic Zones (SEZs).
Leghari outlined a clear plan for eliminating Pakistan’s circular debt within the next five to eight years. Further steps include eliminating electricity duties, rationalizing subsidies, and adjusting net metering, which currently adds a burden of Rs150 billion on consumers. These measures are aimed at creating a more sustainable power sector, while reducing the financial strain on consumers and the government.
The shift towards a wholesale electricity market and the halt on new power purchases were welcomed by international partners such as the World Bank, IMF, and ADB, who pledged continued support for the reforms.
