World Bank Asks Pakistan To Bring Tax Reforms, Remove Sales Tax Exemptions

The World Bank has asked the Pakistani government to make tax reforms and remove the exemptions on duties and sales tax, Pakistan-based ARY News reported.

In its report released on Pakistan, the World Bank advised the Pakistani government of the urgent need for tax system reforms and the removal of sales tax exemptions to promote economic and social improvement, according to ARY News report.

According to the report, the World Bank asked the Pakistani government to create a national policy for child development, called for reducing subsidies on energy and other commodities and suggested the Pakistani government reallocate these funds towards public welfare initiatives.

The report reads, "Government should implement austerity measures and promote public-private partnership in government-owned companies," according to ARY News report.

In its report, the World Bank asked the Pakistani government to restructure the tax system, eliminate the exemptions of duty and sales tax and impose new taxes on real estate and agriculture industry. In addition, it also called for creating a long-term commercial tariff plan and aligning the gas tariff for consumers with the cost of supply.

In 2023, the World Bank said that Pakistan is collecting less tax than its actual capacity. In its report, the World Bank said Pakistan is falling short of Pakistani Rupees (PKR) 737 billion in tax collection and urged Islamabad to end all tax exemptions to release the burden of debts, ARY News reported.

The international lender also asked Pakistan to raise tax incomes from agriculture, properties and retail businesses to generate additional revenue. Two major areas in the provincial jurisdiction--real estate and agriculture--had most of the untaxed wealth and asked the provincial governments to tax these two sectors.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)