IMF raises concerns over Pakistan's missed tax goals, delayed legal settlements

The International Monetary Fund IMF expressed serious concerns over Pakistans failure to meet tax collection targets and the ongoing delay in resolving taxrelated court cases amounting to over PKR 170 billion currently pending before the Constitutional Bench of the Supreme Court The Express Tribune reportedAccording to The Express Tribune citing sources the first round of discussions on Thursday between Pakistani authorities and the visiting IMF mission focused on missed fiscal targets and prolonged legal disputes that continue to hinder the Federal Board of Revenues FBR ability to meet its collection goals Many of the FBRs projections were based on anticipated recoveries from these unresolved casesThe meeting was part of negotiations for the second review of the IMF programme which is expected to unlock a USD 1 billion loan tranche It also marked the final participation of Julieth Pico Mejia the IMFs outgoing tax expert for Pakistan who will be replaced by a representative from Eastern Europe The Express Tribune reportedAccording to officials the FBR collected PKR 1174 trillion against an annual target of PKR 129 trillion missing both the revenue goal and the agreed taxtoGDP ratio target of 105 per cent However Minister of State for Finance Bilal Kayani noted that the taxtoGDP ratio still improved by 14 per cent over the past fiscal yearThe IMF mission was unable to meet Pakistans Finance Minister Muhammad Aurangzeb in person due to his ongoing visit to Washington That meeting is now scheduled for Monday The mission will continue its review until October 8 which also includes an assessment of Pakistans USD 14 billion climate resilience programme The Express Tribune reportedFBR officials informed the IMF that the shortfall was primarily due to lowerthanexpected inflation which dropped to 45 per cent and sluggish economic growth particularly in largescale manufacturingThese factors reduced the impact of new tax measures which generated just over PKR 800 billion well below the PKR 12 trillion projected in the budget Inflation contributed only PKR 766 billion to revenues as reported by The Express TribuneThe downturn in the real estate sector was also cited as a factor in the lowerthanexpected tax collectionsOn the issue of litigation the FBR had previously assured the IMF that the Supreme Court would issue verdicts by June on highstakes super tax cases especially those involving 10 sectors considered discriminatory by some taxpayers and oil companies However these decisions are still pendingIMF officials were informed that although daily hearings have commenced only partial progress has been made arguments in one key case have been concluded while the government has completed its presentation in another according to The Express TribuneThe government now expects verdicts early next month but sources say the continued delays may again cause Pakistan to miss its quarterly tax targetsFBR officials were counting on a favourable ruling to secure PKR 177 billion by the end of September However with just PKR 24 trillion collected so far and only five days left in the month the board would need to gather PKR 140 billion daily a task deemed nearly impossible given the current economic slowdown and earlier revenue advancesDespite the challenges tax compliance has improved The number of income tax return filers for the 2024 tax year has increased to 77 million up from 7 million last year according to The Express TribuneThe Ministry of Finance also updated the IMF on broader fiscal performance The government achieved a primary surplus of PKR 24 trillion exceeding IMF expectations and marking the highest primary surplus in 24 years according to The Express TribuneThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever