Islamabad, November 14, 2024 – In a decisive move to meet Pakistan’s ambitious revenue collection target without resorting to a mini budget, the Federal Board of Revenue (FBR) has shared an actionable plan with the International Monetary Fund (IMF). FBR has committed to achieving the 2024-25 revenue target of PKR 12.9 trillion, reinforcing its stance against imposing additional taxation measures.
Insiders familiar with these developments disclosed on Wednesday that FBR’s revenue target remains steadfast, with no plans to lower it for the current fiscal year. Contrary to concerns, sources assert there will be no sales tax imposition on petroleum products, ensuring the public is shielded from additional financial strain in this sector.
Moreover, the government aims to initiate a nationwide agricultural income tax in 2025, addressing a longstanding gap in tax collection. As a result of recent policy reforms and enforcement initiatives, the tax-to-GDP ratio has risen from 8.8% to 10.3%, a development met with approval by the IMF. This increase is seen as a positive indicator of Pakistan’s fiscal discipline and efforts to broaden its tax base.
Looking ahead, sources suggest that stable exchange rates and an anticipated reduction in policy rates will fuel economic activity in December, expected to bolster revenue collection in the second quarter of 2024-25. To streamline tax compliance further, the FBR has drafted the Tax Laws Amendment Ordinance 2024, which has been submitted to the Prime Minister for approval. This ordinance introduces a unified family income tax return, eliminating the classifications of non-filers and late filers, and focuses solely on enforcement rather than rate increases.
Discussions with the IMF also covered the Tajir Dost Scheme, which seeks to bring small retailers into the tax net. The FBR disclosed that it has already collected PKR 12 billion in taxes from retailers in the first quarter of 2024-25. However, it clarified that only 500,000 potential retailers are being targeted under the Tajir Dost Scheme, rather than the estimated three million small shopkeepers.
An FBR source emphasized that the Tajir Dost Scheme is only a mechanism within a broader strategy to register retailers. “The Tajir Dost Scheme is not the IMF’s main objective; rather, the focus is on expanding the tax net to encompass major retail players. The scheme is simply one approach among several, including tax provisions under sections 236G and 236K of the Income Tax Ordinance 2001,” the source explained.
The ultimate aim of FBR, in alignment with IMF expectations, is to bring significant, revenue-generating retailers into compliance, marking a critical step toward improving Pakistan’s tax ecosystem without compromising public welfare or introducing disruptive fiscal measures.
