Pakistan announces a one-off “super tax” on large companies to meet IMF conditions

June 24. (EUROPA PRESS) –

The Prime Minister of Pakistan, Shebhaz Sharif, announced this Friday a new program of economic measures to respond to the conditions requested by the International Monetary Fund (IMF) to reactivate its loan model with the announcement of a “super tax”, as The president has described, of unique and punctual application to the large companies of the country.

This “super tax” consists of an extraordinary contribution of an additional 10 percent for companies in 13 sectors of the country — from banking to construction to energy and airlines — and will raise their tax rates from 29 percent to 39 percent, the country’s Finance Minister, Miftah Ismail, has immediately qualified on his Twitter account.

“It’s time for wealthy citizens to do their part,” Sharif said in announcing a plan that also includes tax hikes for higher income classes. “It is time for them to show their generosity and I am confident that they will fully contribute to play this role,” added the president in statements collected by the newspaper ‘Dawn’.

With this measure, the country hopes to respond to one of the most demanding conditions of the IMF, such as the reduction of the public deficit, one of the great challenges of a country that has been breaking negative records for four years in this regard.

The Pakistani government, which is still gaining ground after the political crisis that ended in April with the previous Executive led by Imran Jan, considers that the IMF loan seems essential to avoid possible bankruptcy due to the lack of foreign currency liquidity, at a time when the country barely has enough for two months of imports, while inflation is already the highest in the last two years.

Pakistan entered the IMF program in 2019, but only half of the funds have been disbursed to date. Measures such as the cap on fuel prices imposed in March by former Prime Minister Jan — prices soared 70 percent when his successor removed this cap — were instrumental in suspending talks for a resumption, and possible extension of the loan package, initially planned for 39 months for an initial amount of 6,000 million dollars (5,600 million euros).