Govt to Impose 7 New Taxes Even If It Misses FY25 Revenue Target By 1%

The federal government of Pakistan has reached an agreement with the International Monetary Fund (IMF) to implement seven new taxation measures during the 2024-25 fiscal year if revenue collection falls short of the projected target by 1 percent in the current fiscal year.

According to the IMF report titled “Extended Arrangement under the Extended Fund Facility (EFF),” these contingent revenue measures were agreed upon by the government of Pakistan for the upcoming fiscal year.

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The report outlines that if the three-month rolling average revenue collection does not meet the projected target by 1 percent, the government, in consultation with IMF staff, will evaluate the adoption of one or more of the following contingency measures:

1. Increase advance income tax on the import of machinery by 1 percentage point, with an expected monthly collection of Rs. 2 billion.
2. Increase advance income tax on the import of raw materials by industrial undertakings by 1 percentage point, anticipated to yield Rs. 3.5 billion per month.
3. Increase advance income tax on the import of raw materials by commercial importers by 1 percentage point, expecting a collection of Rs. 1 billion per month.
4. Increase withholding tax on supplies by 1 percentage point, projected to generate Rs. 1 billion per month.
5. Increase withholding tax on services by 1 percentage point, expected to collect Rs. 0.5 billion per month.
6. Increase withholding tax on contracts by 1 percentage point, with an expected collection of Rs. 0.5 billion per month.
7. Increase federal excise duty (FED) on aerated and sugary drinks by 5 percentage points, anticipated to generate Rs. 2.3 billion per month.

These measures highlight the government’s commitment to meeting its revenue targets amid challenging economic conditions.