World Bank asks Pakistan to implement tax reforms, eliminate exemptions on duties

ISLAMABAD: The World Bank has asked the Pakistani government to implement tax reforms and eliminate exemptions on duties and sales tax, as reported by Pakistan-based ARY News.

In its report on Pakistan, the World Bank highlighted the urgent need for tax system reforms and the removal of sales tax exemptions to foster economic and social progress, according to the ARY News report.

The report indicates that the World Bank has requested the Pakistani government to establish a national policy for child development, reduce subsidies on energy and other commodities, and suggested reallocating these funds towards public welfare initiatives.

The report states, "The government should implement austerity measures and promote public-private partnerships in government-owned companies," as per the ARY News report.

In its report, the World Bank advised the Pakistani government to overhaul the tax system, remove duty and sales tax exemptions, and introduce new taxes on the real estate and agriculture industries. Additionally, it recommended creating a long-term commercial tariff plan and aligning the gas tariff for consumers with the cost of supply.

In 2023, the World Bank noted that Pakistan's tax collection was less than its actual capacity. The report stated that Pakistan fell short of collecting 737 billion Pakistani Rupees (PKR) in taxes and urged Islamabad to end all tax exemptions to alleviate the burden of debts, as reported by ARY News.

The international lender also encouraged Pakistan to increase tax revenues from agriculture, properties, and retail businesses to generate additional income. It identified two major areas within the provincial jurisdiction — real estate and agriculture — that held most of the untaxed wealth and called on the provincial governments to tax these two sectors.

By RSS/ANI