Islamabad (The COW News Digital) Pakistan has assured the International Monetary Fund (IMF) that it will introduce additional taxation measures worth Rs200 billion to meet the Fund’s fiscal surplus requirements under the ongoing bailout program, official sources confirmed.
The government plans to fulfill this commitment through a series of tax adjustments effective from January 2026. These include higher withholding taxes on landlines, mobile phone usage, and cash withdrawals from banks, as well as new levies on solar panels, sweets, and biscuits.
According to sources quoted by The Express Tribune, Islamabad has been pressing the IMF to allow a downward revision of the annual primary budget surplus target—currently set at 1.6% of GDP, or Rs2.1 trillion. However, during recent review talks, the IMF refused to reduce the target, saying it would only reconsider after Pakistan submits verified flood damage assessments.
In September, Prime Minister Shehbaz Sharif had personally requested IMF Managing Director Kristalina Georgieva to ease fiscal conditions, but the request yielded limited flexibility.
If the IMF maintains its stance, the government will either have to proceed with the proposed taxation plan or implement strict expenditure cuts to stay on track. The Federal Board of Revenue (FBR) is already facing a shortfall of Rs198 billion, with total collections reaching Rs3.65 trillion by October 29—falling short of its four-month target.
The proposed measures are expected to yield roughly half of the Rs200 billion between January and June 2026. Among these, the withholding tax on bank cash withdrawals may be doubled to 1.5%, potentially generating Rs30 billion in additional revenue from non-filers. Similarly, the withholding tax on landlines could rise from 10% to 12.5%, raising Rs20 billion, while the mobile phone levy may increase from 15% to 17.5%, generating Rs24 billion.
The government is also considering increasing the sales tax on solar panels from 10% to 18% to discourage off-grid electricity generation, and imposing a 16% federal excise duty on sweets and biscuits—expected to bring in Rs70 billion annually.
Officials noted that if further revenue is required, Islamabad may raise the general sales tax rate to 19% or expand withholding and excise duties to maintain compliance with IMF conditions.
This latest assurance has paved the way for Pakistan to complete the IMF’s second program review, with a staff-level agreement expected soon. The FBR has declined to publicly comment on the details of the proposed tax plan.
