Islamabad, March 24, 2025: The International Monetary Fund (IMF) has rejected the Federal Board of Revenue’s (FBR) request to reduce transaction taxes in the property sector, The News reported on Monday.
Earlier, senior FBR officials had claimed that the IMF had agreed, in principle, to a 2% reduction in withholding tax on property buyers, effective April 1, 2025, pending formal written approval. However, the IMF has now clarified that it has not approved any such tax reduction.
This decision follows the IMF’s earlier refusal to lower tax rates on tobacco and beverages. With this latest rejection, the FBR’s last attempt to secure tax relief for the property sector has also been turned down.
Meanwhile, Pakistan and the IMF continue discussions on finalizing a Staff-Level Agreement (SLA). However, the IMF has demanded written assurances that provincial governments will refrain from wheat procurement.
In a related development, the IMF has expressed willingness to expand the existing $7 billion Extended Fund Facility (EFF) to include climate financing under the Resilience and Sustainability Facility (RSF). While the exact amount remains unclear, up to $1 billion is expected to be allocated for a Climate Resilience Fund (CRF). Pakistan’s Finance Minister, Muhammad Aurangzeb, expressed optimism last Friday that both sides were close to reaching an SLA.
Commenting on the issue, IMF’s Resident Chief in Pakistan, Mahir Binci, confirmed to a media person that “The IMF has not agreed on lowering withholding tax on property transactions or adjusting the March 2025 tax targets.”
Official sources acknowledge that the FBR is unlikely to meet its monthly revenue target of Rs1,220 billion for March 2025, regardless of IMF approval. Due to an increased number of holidays for Eid ul Fitr, revenue shortfalls are projected between Rs60-80 billion. The FBR has proposed shifting this shortfall to April and May targets rather than deferring it to June, when tax collection typically peaks at the end of the fiscal year.
