Pakistan’s tax talks with IMF to include update on India tensions

Pakistan has decided to take the International Monetary Fund (IMF) into confidence over rising tensions with India.

According to sources, the Federal Board of Revenue (FBR) has also resolved to hold talks with the IMF regarding a possible reduction in the super tax.

The move is aimed at preventing capital flight, as officials fear that continued high taxation may drive investment towards Dubai.

FBR sources said that super tax-related cases worth Rs 200 billion are currently pending in various courts.

In 2022, to shield the general public from taxation, the government imposed additional taxes on major industries. These included the cement, steel, sugar, oil and gas, LNG terminal, fertiliser, banking, textile, automobile, chemical, beverages, and tobacco sectors.

Currently, large-scale industries are subject to a 10% super tax in addition to existing corporate taxes, bringing the overall tax rate for these sectors to 39%.

Pakistan’s tax-to-GDP ratio has risen from 8.8% to 10.4%. Authorities aim to push this further to 10.6% by June, with a target of 11% set for the next fiscal year.