es (STZs) are being removed.
the Pakistani government, as informed too the Senate Standing Committee on Finance, has decided to eliminate tax exemptions for Special Economic Zones (SEZs) and Special Technology Zones (STZs).This decision, made on Thursday, follows the stipulations set by the International Monetary Fund (IMF).
Senator Saleem mandviwalla chaired the meeting where Federal Board of Revenue (FBR) Chairman Rashid mahmood Langrial briefed the committee. Langrial emphasized the government’s commitment to phasing out all tax exemptions by 2035, a key component of the IMF agreement. He also stated that no SEZ or STZ would receive tax relief going forward.
SEZs and STZs: These zones were created to attract investment and boost economic activity by offering tax incentives and other benefits to businesses operating within them.
“Our hands are tied,” Langrial said, noting the withdrawal of various tax concessions and reduced rates across sectors. the committee’s rejection of several budget proposals for the upcoming fiscal year was also a key point.These included a carbon levy on petroleum products, the removal of the debt service surcharge cap for electricity consumers, and a levy on small vehicles.
Senators voiced concerns that these measures would place an additional financial burden on the public.
What is the main point of the Senate Standing Committee on Finance meeting?
The committee rejected several budget proposals, including a carbon levy and changes to electricity surcharges, raising concerns about the impact on citizens.
Public Burden: Senators are worried that new taxes and levies will disproportionately affect ordinary citizens already struggling with economic hardship.
public Sector Entities Scrutinized
Senator Anusha Rahman highlighted issues with autonomous public-sector entities. She pointed out that some entities, like the evacuee Trust Property Board (ETPB), manage important investments with minimal staff. The ETPB manages Rs13 billion with only 12 employees. The committee discussed potential reforms and exemptions to the Public finance Management act (PFMA) to address the issue.
Officials explained that entities such as Nadra, CDA, and Karachi port Trust are allowed to invest their funds.They also earn profits, but these entities have not paid taxes recently. FBR officials reported that Nadra paid Rs8 billion in taxes over the last two years.
the committee opposed proposed amendments to the PFMA. They insisted all government-owned bodies should deposit revenue into the Federal Consolidated Fund to ensure accountability. The changes to property taxation were also reviewed.
Federal Consolidated Fund: This fund is the main bank account of the government, where all revenues are deposited and from which all expenditures are made. Requiring government bodies to deposit revenue here increases transparency.
Property and Online Platform Taxation
The committee reviewed changes to property taxation. The withholding tax on property sales valued at Rs100 million has been increased from 8% to 9.5%. Properties worth less than Rs100 million are taxed at 8.5%, while those below Rs50 million are taxed at 7.5%. The Finance Bill 2025 also includes stricter measures against non-filers. These measures include a reduction in property purchase tax for non-filers, shifting the burden to sellers.
Did you know? The committee also approved a 5% tax on foreign online platforms.
the committee approved a proposal to impose a 5% tax on foreign online platforms.
The Role of the International Monetary Fund (IMF)
The Senate Standing Committee on Finance’s recent discussions highlight the substantial influence of the International Monetary fund (IMF) on Pakistan’s economic policies. The decision to eliminate tax exemptions for Special Economic Zones (SEZs) and Special Technology Zones (STZs) is a direct consequence of the agreement with the IMF, underscoring the organization’s crucial role in shaping Pakistan’s financial landscape.The IMF agreement aims for fiscal consolidation and a more robust economy.
The IMF’s involvement is not limited to tax policies alone. It encompasses a broad range of economic reforms, including fiscal discipline, improved governance, and structural adjustments. The phasing out of tax exemptions by 2035, as emphasized by FBR Chairman Rashid Mahmood Langrial, is a calculated move within this broader framework. This phasing out includes all SEZs and STZs, a move intended to broaden the tax base and improve revenue collection.
Why does Pakistan work with the IMF? The IMF provides financial assistance and technical support to countries facing economic challenges.
What is the goal of the IMF’s involvement? The goal is to stabilize the economy, promote sustainable growth, and ensure long-term financial stability.
Pakistan’s relationship with the IMF is a complex one. While IMF support can provide much-needed funding and guidance during economic crises, the associated conditions often involve austerity measures and structural reforms that can be difficult for the public. The current agreement necessitates difficult choices with the potential for adverse public consequences, as the Senate Standing Committee pointed out. The IMF’s influence extends beyond immediate budgetary needs; it promotes long-term fiscal sustainability.
The IMF’s policy prescriptions often involve:
- Fiscal consolidation: Reducing budget deficits through spending cuts or tax increases.
- Monetary policy adjustments: Managing interest rates and inflation to ensure price stability.
- Structural reforms: Making adjustments to improve the efficiency of economic operations,such as privatization.
The imposition of the 5% tax on foreign online platforms also aligns with the broader trend of ensuring that revenue-generating activities are subject to taxation. Furthermore, the tightening on tax collection and enforcement, as observed in the Finance Bill 2025, plays a key part in the overall objective of improving fiscal performance.
Pakistan has a history of working with the IMF to navigate financial challenges. The impact of these agreements, though, are subject to debate and are frequently enough felt deeply by the Pakistani public. The role of the IMF in Pakistan is a topic of ongoing debate, with some viewing it as a necesary source of financial support, while others criticize the conditionalities associated with IMF loans.
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