IMF Urges Pakistan to Tax Civilian And Military Retirees

IMF calls for Pakistan to tax civilian and military retirees, and to remove income tax exemptions from various pension schemes, aiming to potentially generate up to Rs. 25 billion in additional income tax annually if all pension fund tax exemptions are revoked, as reported by Express Tribune.

The IMF delegation is currently in Islamabad for negotiations on two loan programs: the Extended Fund Facility (EFF) for structural reforms and the Resilience and Sustainability Facility (RSF) to address climate change challenges.

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The proposed measures, which include taxing pensions and gratuity, ending income tax credits for voluntary payments, and reassessing income tax and pension systems for sole proprietors, are viewed as methods to increase revenue. However, they may place additional strain on the country’s fixed-income population.

Additionally, the IMF suggests imposing significant taxes on pension funds, contributions, and income from approved Pension Funds regulated by the Securities and Exchange Commission of Pakistan (SECP), aiming to generate up to Rs. 8 billion.