After rejecting tax increases on fertilizers and pesticides, Pakistan and the IMF are now looking at backup plans. The new proposals target solar panels and internet services to boost government revenue if collections fall short.
Sources say these emergency tax measures will be part of the IMF’s second review report. The report will come after the Fund’s Executive Board approves a $1 billion payment under the $7 billion Extended Fund Facility (EFF).
These taxes will only kick in under two conditions. First, if revenue falls short between July and December beyond agreed limits. Second, if the Finance Ministry cannot cut its spending.
The Federal Board of Revenue (FBR) has proposed raising the General Sales Tax on imported solar panels from 10% to 18% starting January 2026. The government may also increase the withholding tax on internet services from 15% to 18% or 20%.
Officials want to slow solar panel growth because less grid usage is pushing capacity payments to Rs1.7 trillion this year. Right now, rooftop solar produces 6,000 megawatts, which could double quickly. The FBR estimates imported panels could generate 25,000 to 30,000 megawatts in coming years.
Telecom experts say the IMF’s new tax proposals will make Internet and solar panels high price in Pakistan even worse, hitting low-income families the hardest.
The FBR has already missed its first-quarter target by Rs 198 billion and now needs to collect Rs 6.695 trillion by December 2025.
