Islamabad: The government put its attention on collecting 250 billion rupees by expanding the scope of the tax network, implementing the framework of compliance risk management (CRM), and targeting retailers as part of a wider effort to close a significant shortage of revenue worth 604 billion rupees in the first eight months of the current fiscal year.
The International Monetary Fund (IMF) reviews these measures as part of the ongoing discussions related to the financial performance of Pakistan under the Fund’s $ 7 billion in facilities. The International Monetary Fund delegation is expected to start official negotiations today in Islamabad, where the Minister of Finance and Revenue will meet Mohamed Orangazib to review the progress of economic reforms to the country.
To fill the revenue gap, the government relies on administrative measures to bring more retailers to tax fold. The Federal Revenue Council (FBR) implements the Tajir Dooost scheme, expanding the compliance risk management framework (CRM), and increasing efforts as part of the CIP.
FBR has prepared a CRM framework with the help of external services, with plans to use artificial intelligence (AI) to review about 3 to 5 percent of the six million tax declarations. Over time, the audit capacity will expand. Independent account auditors will also be set to improve the effectiveness of the system. Currently, CRM measures have been put in the big taxpayers units (LTU) in Islamabad, Karachi, and Lahore, with other expansion plans.
To support this initiative, FBR merged data from 145 agencies through the Memorandum of Understanding (MOS) under the Documentation Law in Pakistan. In addition, digital bills, track, trade, and tougher controls are offered to combat tax fraud and evasion.
FBR also improves the path and trade system to ensure better supervision of the supply chain, which includes a grouping to monitor each step of the process. Besides these measures, the International Monetary Fund will review the tax penalty system in Pakistan to assess its effect and effectiveness. Results will help form a general control base (GAAR) that aims to reduce taxes.
In addition to discussions on tax measures, the International Monetary Fund review mission will evaluate the economic performance of Pakistan for the first half of the fiscal year (July to December). This will include evaluating any necessary amendments to the total and financial economic framework for the rest of the year. There will be a major problem in these conversations, which is to identify parameters for the 2025-26 budget. If both sides fail to reach consensus, the discussions may continue until Parliament approves the following budget.
On another front, the government is implementing major reforms in the energy sector. The Federal Power Minister Sardar Owais Ahmed Khan Legari reassured international development partners that negotiations with independent energy producers (IPPS) are running transparently. The most prominent efforts made to reduce electricity costs and improve the ability to afford costs for both consumers and industries.
Leghari emphasized many major reforms, including limiting the country’s electricity capacity by 7,000 megawatts, eliminating factories based on oven oil, and moving from “take or pushing” contracts to “take and pay” arrangements. The government is also pressing for the privatization of energy distribution companies (DISCOS) and the introduction of new regulatory frameworks for SEZS.
Legari made a clear plan to eliminate Pakistan’s circular debts during the next five years. Additional steps include eliminating electricity duties, rationalizing support, and controlling net measurement, which currently adds 150 billion rupees to consumers. These measures aim to create a more sustainable energy sector, while reducing financial pressure on consumers and government.
The shift towards the wholesale electricity market and the cessation of new energy purchases were welcomed by international partners such as the World Bank, IMF and ADB, who pledged continuous support for reforms.
