The second round of negotiations between the government’s economic team and the International Monetary Fund (IMF) is currently underway in Islamabad, with a strong focus on finalising the federal budget for the fiscal year 2025–26.
During the talks, the government has assured the IMF of stringent measures against non-filers, including a proposed ban on property and vehicle purchases for those not registered with the tax system.
According to sources, Pakistan’s economic team participating in the talks includes officials from the Ministry of Finance, Federal Board of Revenue (FBR), Planning Commission, Economic Affairs Division, and the Ministry of Petroleum.
As per insider reports, key discussions are taking place on income and expenditure frameworks. One of the proposals under consideration is to provide income tax relief to salaried individuals, particularly those earning between Rs1 million and Rs1.2 million annually, who may be exempted from tax. This relief plan is being pursued on the instructions of Prime Minister Shehbaz Sharif.
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FBR sources confirmed that negotiations with the IMF will continue until May 23, while all budget proposals are expected to be finalised by May 22.
In line with IMF conditions, the government has pledged to take firm steps to expand the tax base by targeting non-filers. Under the proposed policy, non-filers may be barred from conducting major financial transactions, purchasing property, or buying vehicles.
“There will be no leniency for non-filers in the new budget,” an FBR official said. “In fact, tougher restrictions are being formulated, and work is underway to eliminate the non-filer category altogether.”
Sources further revealed that the IMF has been briefed about the limited success of the recent trader-friendly tax schemes. However, withholding tax adjustments on unregistered retailers have shown promising results, with a 51% increase in the number of registered filers among traders and wholesalers.
To strengthen tax compliance, the FBR has activated a Compliance Risk Management System in major cities, including Islamabad, Karachi, and Lahore, with plans to extend the system to corporate tax units nationwide.
Final policy-level negotiations between Pakistan and the IMF will cover budget estimates, tax policy, and expenditure targets for the next fiscal year. The IMF mission is scheduled to remain in Islamabad until May 22.
Officials from the State Bank of Pakistan are also expected to join the talks with the IMF delegation in the coming days.
