The International Monetary Fund (IMF) has declined Pakistan’s proposals to introduce a capital value tax on movable assets such as cash and gold, and a 5% federal excise duty (FED) on one-day-old chicks.
While the IMF did approve a digital services tax expected to generate Rs. 10 billion and supported a reduction in income tax for those earning under Rs. 500,000 per month, it rejected raising the tax exemption threshold to Rs. 1.2 million and denied any relief for individuals in the highest 35% tax bracket or the 10% surcharge on higher monthly incomes.
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The IMF argued that the capital value tax should not be implemented, urging Pakistan to focus on income-based taxation instead of taxing wealth.
The tax on chicks was also dismissed by the IMF, which criticized the lack of a proper sectoral review and called the move inconsistent with claims of reducing food taxation.
Other potential measures include raising the dividend tax on mutual funds and the withholding tax on interest income from 15% to 20%, as well as removing income tax exemptions for venture capital firms and cinemas.
The IMF is also pressing for a 10% excise duty on fertilizer—doubling the current rate—and a new 5% tax on pesticides, despite resistance from the Prime Minister. A proposed 5% duty on processed foods would push the total tax burden on those items to nearly 29%.
