ISLAMABAD: International Monetary Fund (IMF) has advised Pakistan for raising petroleum taxes and withholding taxes for increasing tax-to-GDP ratio.
In its country report on Pakistan released on Thursday, the IMF said Pakistan’s tax-to-GDP ratio has remained low by international comparison, and mobilizing additional tax revenues can support fiscal consolidation and generate resources to step up priority infrastructure and social spending.
It stressed that options include further reducing tax concessions and exemptions, raising petroleum taxes and withholding taxes, and strengthening collection of provincial taxes on services, property, and agricultural income.
Strengthening tax administration by improving the FBR’s access to third-party information, enhancing tax audits, building a centralized electronic fiscal cadaster, and reducing the stock of outstanding tax refund claims will also be important. In this context, the financial transactions withholding tax for non-filers has been helping to address tax evasion, and the FBR’s new Anti-Money Laundering (AML) unit will also support efforts to combat tax evasion and recover their illicit proceeds.