ISLAMABAD: Pakistan ‘fails’ to satisfy IMF on real estate taxation reforms.
The fifth round of talks between Pakistan and the International Monetary Fund (IMF) is currently underway as Pakistan seeks a fresh bailout package to address its balance of payments crisis.
However, the negotiations have encountered difficulties, particularly over the measures proposed to bring the real estate sector into the tax net.
Increased Taxes on Plot Transactions:
Pakistan has suggested increasing taxes on the sale and purchase of plots, specifically targeting non-filers.
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This measure aims to enhance tax compliance and boost revenue from the real estate sector, which has historically been under-documented and under-taxed.
Documentation and Banking Channels:
In an effort to ensure transparency and curb cash transactions, Pakistan has proposed the mandatory use of banking channels for all real estate transactions.
This would include registering all plot sales and purchases in housing societies with the Federal Board of Revenue (FBR).
The move is intended to document the sector more effectively and reduce the prevalence of black money.
Upcoming Budget Measures:
The government plans to introduce additional measures in the upcoming budget to eliminate undocumented transactions in the real estate sector.
These include proposals to levy taxes on property transaction files, further tightening the documentation requirements and expanding the tax base.
IMF’s Concerns and Demands:
During the talks, the IMF has emphasized the need for Pakistan to privatize its state-owned entities.
The fund argues that privatization could reduce losses, improve efficiency, and alleviate some of the fiscal burdens currently shouldered by the government.
Utility Price Adjustments:
The IMF has also called for an increase in electricity and gas prices. This demand is aimed at addressing the financial deficits in these sectors and improving overall fiscal stability.
The IMF is concerned about the increasing losses of state-owned entities and views price adjustments as a necessary step toward economic reform.
🚨 The IMF mission has asked Pakistani authorities to increase the general sales tax GST to 18%.
The demand was put forward by the IMF during four round of talks with Pakistan authorities for a fresh loan.
— Asad Nasir (@asadnasir2000) May 16, 2024
As Pakistan ‘fails’ to satisfy IMF on real estate taxation reforms, it has to meet IMF’s demands for a bailout package.
