IMF calls for Pakistan to rationalise tax concessions, bring under-taxed sectors into net

According to Business Recorder, the International Monetary Fund has urged Pakistan to scale back tax exemptions and extend the net to sectors that pay too little. The Fund says a more equitable and neutral structure would help lift revenue, improve compliance and support private-sector expansion. Jihad Azour, the Fund's director for the Middle East and Central Asia, made these remarks at a Ministry of Finance and Revenue workshop.

Azour argued that fairness requires tackling under-taxed sectors, trimming concessions and easing disproportionate burdens, and that policy changes must be backed by stronger revenue administration. He observed that numerous nations possess good reform proposals, yet few convert them into lasting outcomes, which hinges on ownership, coordination and communication. Earlier this month, IMF staff and Pakistan struck a staff-level deal covering the fourth assessment under the $7-billion Extended Fund Facility, the third under the Resilience and Sustainability Facility, and the 2026 Article IV consultation.

Finance Minister Muhammad Aurangzeb separately argued that the economy needs to pivot toward durable, export-driven expansion and steer clear of past boom-and-bust cycles. He called taxation a key element of the structural reform programme and said tax design should follow economic value rather than simply meeting revenue targets. Economic growth has moved from a shrinkage of about 0.3 per cent to roughly 3.65 to 3.7 per cent, the minister said.