ISLAMABAD – Pakistan's newly elected government is currently in discussions with the International Monetary Fund (IMF) to secure additional funding aimed at addressing economic challenges. The IMF has advised the government to explore additional sectors for revenue generation.
During these discussions, the IMF has reportedly urged the Federal Board of Revenue (FBR) to implement additional taxes on retail and real estate sectors, while also proposing the inclusion of cryptocurrencies in the tax framework.
The IMF has recommended that Pakistani authorities mandate property developers to monitor and report all transactions preceding property titles, with penalties for non-compliance.
These strict recommendations may potentially be included in an upcoming bailout package, with the Federal Board of Revenue of Pakistan expected to incorporate them into the 2024-25 budget.
Identifying challenges in taxing capital gains from real estate transactions, the IMF has highlighted that property interests are often not registered until legal completion, resulting in untaxed profits from pre-completion transfers.
Local media reports suggest that the visiting IMF delegation has suggested taxation on new types of investments like cryptocurrencies. Additionally, they have proposed taxing capital gains on real estate and listed securities regardless of the duration of ownership.
The multilateral institution has also recommended amending the definition of "personal movable property" in the Income Tax Ordinance to encompass a broader category of assets eligible for investment, excluding those utilized as stock in trade or assets subject to depreciation.
