ISLAMABAD: The upcoming tax relief package proposed by Pakistan is now set to mainly focus on relief to the salaried class amid ongoing deliberations with the International Monetary Fund (IMF) shaping the country’s fiscal policy direction.
While a broader reduction across sectors was initially anticipated, the IMF appears to have been resistant on this count, limiting the policy space for the government and nudging policymakers towards targeted instead of blanket tax cuts.
Sources privy to the development say that the Federal Board of Revenue (FBR) has submitted the revised proposals for consideration to the prime minister.
In particular, the proposal emphasizes tax relief to the middle-tier salary earners, especially the middle-income group falling between the income brackets of Rs 200,000 and Rs 300,000.
This bracket forms a bulk of the country’s formal tax base. Sources said that in addition to middle-income salary earners, higher salary brackets are also likely to see a change to ease pressure on high-end salary groups through a reduction in tax rates and slabs.
Relief to the corporate sector, reduction in super tax, and changes in dividend withholding tax, according to sources, are now unlikely to be part of the package given the current constraints being faced by the government under the IMF program.
It is only after the conclusion of discussions with the IMF, expected in the next few days, that a final approval of the revised tax relief package would be considered and adopted ahead of the important budgetary decisions expected around June 10.
