FBR surpasses IMF-set tax-to-GDP target for Dec 2024

ISLAMABAD: The country’s tax-to-GDP ratio has surpassed the target agreed upon with the International Monetary Fund (IMF) for the end of December 2024, as the Federal Board of Revenue’s (FBR) collected Rs5,624 billion during the first half (July-December) of the current fiscal year.

Under the IMF’s targets, the tax-to-GDP ratio was expected to reach 10.6 percent of GDP for the entire fiscal year 2024-25. However, by December 31, 2024, the ratio had already touched 10.8 percent.

Official data shared with The News on Wednesday indicated that the tax-to-GDP ratio remained below target at 9.5 percent during the first quarter (July-September), with GDP growth estimated at 0.92 percent.

For the second quarter (October-December), GDP growth is expected to be around 2.57 percent. With tax collections amounting to Rs5,624 billion, the tax-to-GDP ratio exceeded the envisaged target, reaching 10.8 percent for the first half of the fiscal year.

In the last fiscal year (2023-24), the tax-to-GDP ratio stood at 9.7 percent. To secure the $7 billion Extended Fund Facility (EFF) with the IMF, Pakistan committed to increasing this ratio to 10.6 percent for the full fiscal year ending June 30, 2025.

Historically, Pakistan’s tax-to-GDP ratio has ranged between 8 and 9.5 percent over the past several years. The IMF is now focused on increasing this ratio annually. Under the FBR’s Transformation Plan, it is projected to rise to 13.5 percent over the medium term.

In December 2024, the FBR had collected Rs1,328.1 billion against a target of Rs1,373 billion, achieving 96.7 percent of the fixed target. The breakdown of tax collections includes Rs791.3 billion from income tax, Rs 414.6 billion from sales tax, Rs69 billion from federal excise duty, and Rs122.8 billion from customs duty. After paying Rs70 billion in tax refunds, the net revenue collection stood at Rs1,328.1 billion.