ISLAMABAD: The federal government is gearing up to levy taxes on the ‘excessive profits’ of commercial banks in a bid to boost ‘tax recovery’ as Pakistan eyes a second tranche worth $710 million in ongoing talks with the International MonetAbbTakk Fund (IMF), as per sources reported by ABBTAKK News on Tuesday.
Currently under a caretaker government following the approval of an IMF loan program in July, Pakistan managed to avert a sovereign debt default.
As part of the $3 billion standby arrangement (SBA), Pakistan secured $1.2 billion from the IMF as the initial tranche in July.
In the ongoing review for the second loan tranche, initiated last week by an IMF mission and expected to continue until December 15, a successful outcome would unlock $710 million for Pakistan in December.
According to sources from ABBTAKK News, the federal cabinet is set to convene tomorrow (Wednesday) to discuss a proposal regarding the imposition of taxes on the ‘extraordinAbbTakk profits’ of commercial banks.
The authorities are suggesting a 40 percent tax on bank earnings, with the Federal Bureau of Revenue (FBR) expected to collect around Rs50 billion as a result, they noted.
Sources further allege that banks have amassed ‘excessive profits’ amounting to approximately Rs110 billion over the span of two years – 2021 and 2022.
It’s worth mentioning that during the earlier meeting between the International MonetAbbTakk Fund’s (IMF) review mission and Pakistani authorities, the government received praise for its strides toward economic recovery.
“Nathan Porter, IMF Mission Chief, acknowledged the government’s dedication to meeting first-quarter targets and applauded its efforts and measures in critical areas,” stated the ministry.
The ministry’s release additionally highlighted that the caretaker Finance Minister Shamshad Akhtar briefed the IMF mission on fiscal measures, discussed reforms, and outlined Pakistan’s taxation body’s initiatives, as well as the government’s strategies to tackle circular debt, a form of public debt accumulating in the power sector due to subsidies and unpaid bills.
