Islamabad, April 28, 2026 – Pakistan is preparing tax policy changes and sweeping removal of exemptions to raise around Rs350 billion ($1.26 billion) in additional revenue in the 2026–27 fiscal year, as part of commitments under its ongoing International Monetary Fund (IMF) programme, sources familiar with the matter said on Monday.
The measures are expected to form a key pillar of the upcoming budget as the government seeks to meet strict fiscal targets under structural reforms agreed with the IMF. Officials said discussions are focused on phasing out multiple tax concessions across sectors that have long eroded the country’s revenue base.
According to sources, if the full Rs350 billion target is not achieved through withdrawal of exemptions alone, the government is likely to introduce additional taxation measures to close the gap.
A major area under review is import-related tax concessions under the 12th Schedule of the Income Tax Ordinance, 2001. Officials in the tax policy wing of the Ministry of Finance have reportedly examined proposals that include either eliminating these exemptions entirely or doubling existing tax rates on selected imports to boost revenue collection.
Pakistan remains under a 37-month Extended Fund Facility (EFF) and a 28-month Resilience and Sustainability Facility (RSF) backed by the International Monetary Fund. The IMF has repeatedly urged Islamabad to widen its tax base, reduce exemptions, and strengthen fiscal discipline to ensure long-term macroeconomic stability.
In a statement issued on March 11, 2026, the IMF said discussions with Pakistani authorities on programme reviews had made “considerable progress,” though negotiations were continuing to assess global economic risks and policy adjustments.
The IMF also highlighted progress on fiscal consolidation, tighter monetary policy to contain inflation, and reforms in the energy sector. It stressed that deeper structural reforms were essential to support sustainable growth while protecting social spending on health, education, and welfare programmes.
Pakistan’s government has maintained that IMF-backed reforms are critical to stabilising public finances, although such measures often face resistance from industry groups and political stakeholders due to inflationary pressures and higher compliance costs.