Wednesday, July 24, 2024

IMF Proposes 45% Tax on Agriculture Income as Pakistan Negotiates New Bailout Package

The International Monetary Fund (IMF) has proposed a 45% tax on agricultural income as part of Pakistan’s negotiations for a new bailout package, sources revealed.

The IMF has set a structural benchmark requiring provincial governments to amend their laws to impose a standard individual income tax rate of up to 45% on agricultural income. Finance Minister Muhammad Aurangzeb emphasized the need for taxing agriculture and property sectors to sustain the tax system.

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Currently, the agriculture sector contributes only 0.1% to Pakistan’s total tax collection despite accounting for 24% of the economy. The IMF aims to reduce this disparity by urging provinces to adopt the tax rate applicable to non-salaried business individuals.

A deadline of October 2024 has been set for the implementation of this change. Additionally, the IMF has requested the removal of existing income tax exemptions for the livestock sector by October this year.

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