The International Monetary Fund (IMF) has refused the Federal Board of Revenue (FBR) appeal to slash taxes on real estate transactions in Pakistan. The move contradicts previous announcements from the federal government, which said that the IMF had agreed to lower the withholding tax on real estate purchases by 2 percentage points from April 1, 2025.
The IMF has also declined to cut taxes on cigarettes and drinks. The federal government also has to give written commitments that the provinces will not become engaged in procuring wheat if shortfalls occur.
In a welcome move, the IMF has shown interest in widening Pakistan’s $7 billion Extended Fund Facility (EFF) to provide climate-related financing through the Resilience and Sustainability Facility (RSF). While the amount is not yet certain, it is reported that Pakistan may be provided with as much as $1.2 billion for a Climate Resilience Fund (CRF).
Mahir Binci, the Resident Representative of the IMF, verified that the IMF did not consent to lower the withholding tax on real estate deals or modify the targets of March 2025 tax collections. Thus, the FBR is poised to fall short of its target of Rs. 1,220 billion in revenue for the month. The shortfall has been proposed to be transferred to April and May, rather than June.
