Amid the possibility of granting a waiver over provinces’ delay in the collection of Agriculture Income Tax (AIT), the International Monetary Fund (IMF) review mission has sought details from provincial revenue authorities on their preparedness for AIT collection from July 1, 2025.
According to media reports, the visiting IMF team also asked the provinces to convert the collection of the GST on services from a positive to a negative list from the next fiscal year 2025-26.
The development comes as an IMF team led by Mission Chief to Pakistan Nathan Porter is currently in Pakistan for the first review of the $7 billion Extended Fund Facility (EFF) secured by the country last year.
If the IMF approves the first review of the loan, the country is in line to receive about $1 billion as the second instalment of the loan package. The IMF review is being closely watched by investors as a sign of progress in economic reforms.
The visiting IMF mission and all four provinces have analysed the performance on the National Fiscal Pact (NFP) signed among the Centre and the four provinces under the lender’s conditionalities.
“The IMF seemed lenient over delay in collection of AIT as a workshop in collaboration with the World Bank was held recently in Islamabad where the Bank was given the mandate to prepare a future roadmap for collection of AIT from the next fiscal year, with effect from July 1, 2025,” top official sources confirmed while talking to the publication.
Meanwhile, the provinces have informed the Washington-based lender that the conversion of GST on services from a positive to a negative list would be implemented as agreed in the National Tax Council (NTC) but the provinces would have to seek approval of their respective cabinets and provincial legislative assemblies which would be sought on the occasion of next budget for 2025-26.
Furthermore, the IMF also sought details to collectively raise revenues from corporate tax in agriculture and GST on services, combined with provincial tax efforts in expanding additional areas of revenue collection.
The lender has also asked to develop, implement and collect revenue under a common approach to property taxation, implement the necessary administrative reforms to narrow the tax compliance gap, including for the GST.
It has also sought details regarding the NTC terms of reference which will be expanded to include the design of the relevant tax measures, including property tax and the necessary legal and administrative changes to implement them.
