Pakistan's newly elected government is discussing additional funding with the International Monetary Fund to address economic challenges. The IMF has suggested imposing taxes on retail, real estate, and cryptocurrencies, with recommendations likely to be included in the upcoming budget.
ISLAMABAD – Pakistan's newly elected government is engaging in discussions with the International Monetary Fund (IMF) for additional funding to address economic challenges. The global lender has advised the government to explore more sectors for potential revenue generation.
During the negotiations, the IMF has purportedly urged the Federal Board of Revenue (FBR) to levy additional taxes on the retail and real estate sectors, in addition to bringing cryptocurrencies under the tax regime.
The IMF is advocating for the imposition of mandates on property developers to monitor and report all transactions preceding property titles, with penalties for non-compliance.
These stringent recommendations may be included in an upcoming bailout package, with the FBR of Pakistan expected to incorporate them into the 2024-25 budget.
The IMF has identified challenges in taxing capital gains from real estate transactions, particularly due to property interests often remaining unregistered until legal completion, resulting in untaxed profits from pre-completion transfers.
Local media reports suggest that the visiting IMF delegation has proposed the taxation of new investment types like cryptocurrencies. Furthermore, it has recommended that capital gains on real estate and listed securities be subject to taxation irrespective of their holding period.
The multilateral institution has also advised amending the definition of "personal movable property" in the Income Tax Ordinance to encompass a wider range of assets eligible for investment, excluding those utilized as stock in trade or assets subject to depreciation.
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