Structural Benchmark Agreement
Pakistan and the International Monetary Fund (IMF) have reached an agreement that all four provinces will amend their agriculture income tax rates to match the federal personal income tax and corporate tax rates by the end of October 2024. This agreement is part of the proposed structural benchmark outlined in the revised Memorandum of Financial and Economic Policies (MEFP).
Implementation Timeline
- Amendment Deadline: By October 2024, the provinces must legislate changes to their agriculture income tax rates.
- Effective Date: The new tax rates will come into effect on January 1, 2025.
Collection of Agriculture Income Tax
- Provincial Commitment: Each province has committed to implementing the amended income tax rates.
- Federal Board of Revenue (FBR) Role: If any province struggles with the collection of agriculture income tax, the FBR will temporarily collect it on behalf of the province until it can build its capacity.
Communication and Approval
An official communication from one provincial government to the federal Ministry of Finance confirmed that the revised text of the MEFP was shared for approval. The MEFP, drafted by the IMF, directs the provinces to align their agriculture income tax regimes with the federal personal income tax for small farmers and the corporate income tax for commercial agriculture through legislative changes by the end of October 2024.
This alignment aims to streamline tax policies across the country and ensure a consistent approach to taxing agricultural income, enhancing revenue collection and fiscal management.
