KARACHI: The International Monetary Fund (IMF) has suggested Pakistan to do away with layers of tax rates and their multiple collection mechanisms, officials revealed on Saturday, encouraging the country’s economic managers to introduce uniform tax rates and establish a single collection authority since it will bring down the cost of doing business in Pakistan and reduce duplication of taxes and wasteful documentation.
Led by Ernesto Ramirez Rigo, an IMF team is currently visiting the country to conduct the first quarterly review of the implementation of fiscal policies Islamabad agreed with the Fund while availing $6 billion bailout program in July this year.
“He [Rigo] also emphasized the harmonization of tax system and creation of a single tax base as it directly impacted the ease of doing business and went a long way in creating an enabling environment for commercial activities and boosting investor confidence,” the finance ministry said in a statement issued on Friday.
Pakistan has a complex and multilayered taxation system at the federal and provincial level, requiring a great deal of documentation.
“This [IMF-proposed authority] can eliminate duplication of taxes and minimize documentation work, though the stakeholders involved in this may not understand the proposal. This will also mitigate the fears of taxpayers eventually,” Dr. Abid Qaiyum Suleri, member of the Economic Advisory Council (EAC), told Arab News.
The federal government may face resistance from provincial administrations over the implementation of the single tax collection authority mechanism.
At the moment, Pakistan has informed the visiting IMF team that the federal and provincial administrations were in a continuous dialogue to improve coordination and create harmony on issues related to fiscal and budget management, multiplicity of tax rates and reconciliation of input adjustment, the finance ministry said.
The IMF delegation head appreciated the current level of understanding between the Center and the provinces, though he also hoped it would lead to a consensus between them over a harmonized tax collection mechanism, according to the ministry.
The government has been struggling with the country’s ailing economy, which is projected to squeeze from last year’s 3.3 percent to 2.4 percent during the current fiscal year, ever since it assumed political power in August 2018.
The visiting IMF mission appreciated “good financial and fiscal management and maintenance of expenditure within the budget,” the statement said, adding that the delegation chief “stressed upon full use of development budget to achieve development goals.”
As the IMF team measures Pakistan’s economic performance against the commitments made while availing the loan program, economists say that Islamabad has almost achieved its given targets and deserves the next tranche.
“We have reduced external deficit, provided the IMF team the list of privatization entities, increased energy costs, enforced flexible exchange rate regime and given autonomy to the State Bank,” Muzamil Aslam, a senior economist, told Arab News.
“The macro economic trends have started looking better … The IMF team should be satisfied,” Dr. Suleri agreed.
IMF recommends Pakistan single tax collection authority, higher development spending
IMF recommends Pakistan single tax collection authority, higher development spending
- The Fund’s visiting delegation says the single authority will eliminate issues such as double taxation and reduce the cost of doing business
- Experts say Pakistan has achieved macroeconomic targets assigned by the IMF and deserves the next loan tranche
Pakistan increases Reko Diq investment to $244 million as Barrick reviews project
- State-owned PPL injects $50.2 million more in special purpose vehicle formed to manage Islamabad’s 25 percent stake in copper-gold mine
- Canadian operator Barrick Mining Corporation this month ordered project’s review following deadly separatist attacks in Balochistan province
KARACHI: The state-run Pakistan Petroleum Limited (PPL) has invested an additional Rs14 billion ($50.2 million) equity in the multi-billion-dollar Reko Diq copper-gold mine, the company said in its latest financial report on Thursday, as the project’s Canadian operator reviews the project following recently deadly attacks.
Canada’s Barrick Mining Corporation owns a 50 percent share in Reko Diq in the southwestern Balochistan province, along with three Pakistani federal state-owned enterprises including PPL that own 25 percent, while the Balochistan government has the remaining 25 percent share in the project.
The Canadian company announced earlier this month it planned to “immediately” begin a comprehensive review of all aspects of the Reko Diq project following coordinated attacks in Balochistan on Jan. 30-31 that killed 36 civilians and 22 security forces personnel.
“With respect to the Reko Diq project, the company has made further equity investment in Pakistan Minerals Private Limited (PMPL) during the period amounting to Rs14,025 million ($50.2m),” PPL told its shareholders in its financial statement for the half year ending at Dec. 31.
The additional equity has increased PPL’s total cost of investment in the PMPL to Rs68.1 billion ($243.6 million), it added.
The PMPL is a special purpose vehicle formed to manage the federal government’s 25 percent stake in the Reko Diq project. It is a consortium of three state-owned enterprises (SOEs) namely the PPL, the Oil & Gas Development Company Limited (OGDCL) and Government Holdings (Private) Limited (GHPL) which is responsible for handling financing, equity contributions and strategic, legal or technical dealings with partners like Barrick.
“The project continued to advance site works during the period (July-December FY26),” the PPL said. “The operator (Barrick) is undertaking a review of all aspects of the project, including with respect to the project’s security arrangements, development timetable and capital budget.”
This week, Balochistan Chief Minister Sarfraz Bugti assured investors that Pakistan has the “capacity and capability” to secure the Reko Diq project amid surging militancy.
The PPL explores, drills, and produces oil and natural gas. Its current portfolio, together with its subsidiaries and associates, consists of 47 exploratory blocks that include one offshore Block-5 in Abu Dhabi and one onshore block in Yemen.
In December, PPL signed a strategic Deed of Assignment under which it assigned 25 percent of its participating interest (PI) and operatorship of Eastern Offshore Indus C block to Turkish Petroleum Overseas Company, a unit of state-owned Türkiye Petrolleri Anonim Ortaklığı.
Assigning 20 percent PI each to OGDCL and Mari Energies Limited, the company has retained the remaining 35 percent PI to play a key role in the block’s development.
