Islamabad, The International Monetary Fund (IMF) has recommended that the Federal Board of Revenue (FBR) abolish the special tax regime for the construction industry and incorporate it into the mainstream income tax framework. This suggestion emerged from a news report on March 15, highlighting the IMF's call for a comprehensive review and restructuring of Pakistan's tax policies during the second review of the Stand-by Arrangement (SBA) discussions with FBR officials.

According to Zameen.Com, the IMF's proposals aim at streamlining and enhancing the efficiency of the tax system. Among the significant changes urged is the elimination of the FBR's authority to unilaterally grant tax incentives, which the IMF argues should be replaced with a more transparent, time-limited, and analytically grounded approach to tax exemptions and incentives. The international lender also calls for a reevaluation and potential revision of the criteria for tax credits related to charitable contributions and specific individual statuses to ensure fairness and efficiency in the tax system.

Moreover, the IMF emphasizes the need for a more unified and harmonized tax landscape across Pakistan, proposing an expanded role for the National Tax Council in standardizing tax rates and enforcing provincial tax regulations. Another key recommendation includes the creation of a Tax Policy Unit within the Ministry of Finance, Revenue, and Economic Affairs, designed to spearhead tax policy reforms and facilitate better data sharing and coordination among the FBR and other relevant government bodies.

These recommendations reflect the IMF's broader agenda to promote fiscal stability and transparency in Pakistan through targeted reforms aimed at broadening the tax base, eliminating preferential treatment, and fostering a more equitable tax environment.