Islamabad, Mar 24, 2025: The International Monetary Fund (IMF) has firmly denied the Federal Board of Revenue’s (FBR) proposal to reduce transaction taxes in Pakistan’s real estate sector.
This contradicts earlier claims by government officials that the IMF had approved a 2% cut in withholding tax on property purchases, expected to take effect from April 1, 2025.
Additionally, the IMF has maintained its stance against reducing tax rates on tobacco and sugary beverages.
In a separate demand, the global lender has required the federal government to provide a written guarantee that provinces will not engage in wheat procurement, even in case of shortages.
IMF’s Climate-Related Funding for Pakistan
Despite these fiscal restrictions, the IMF has shown a willingness to expand Pakistan’s $7 billion Extended Fund Facility (EFF) by incorporating climate-related financing under the Resilience and Sustainability Facility (RSF).
While the final amount remains undetermined, earlier reports suggest that Pakistan could receive up to $1.2 billion for a Climate Resilience Fund (CRF) to support environmental and sustainability initiatives.
Revenue Collection Challenges for FBR
IMF Resident Representative Mahir Binci clarified that the lender has not approved any tax reductions on property transactions, nor has it adjusted tax collection targets for March 2025.
This development puts the FBR in a challenging position, as it now risks missing its ambitious revenue collection target of Rs. 1,220 billion for the month.
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To address this shortfall, a proposal has been floated to shift the burden to the revenue targets for April and May instead of accumulating pressure in June.
With the IMF standing firm on tax policies, the Pakistani government faces tough economic choices.
While new climate financing offers hope, the strict tax collection demands will likely put further strain on the country’s already struggling real estate and business sectors.
