ADB to provide additional $200 million for Pakistan tax reforms, urges broader tax base

According to Profit, the Asian Development Bank plans to provide an extra $200 million to modernise Pakistan's revenue administration. The funding would expand an existing project aimed at digitising revenue systems, and the bank's board is expected to consider it later this year. ADB Vice President Yingming Yang made the announcement at a tax and fiscal sustainability dialogue held on Thursday.

Yang said Pakistan has made headway in restoring macroeconomic stability, but further reforms depend on mobilising domestic resources efficiently and equitably. He pointed to a narrow tax base, widespread informality and weak compliance as the main obstacles. He also urged fewer exemptions, saying an efficient system needs a broad base to reduce distortions and compliance costs.

The bank backed the Prime Minister's FBR Transformation Plan and a new tax operating model, which it said could improve taxpayer services and reduce discretionary interventions. Yang welcomed the creation of a Tax Policy Office in the Finance Ministry, and said higher domestic revenue would reduce reliance on debt and external financing.