IMF blocks major tax breaks for corporate sector

Negotiations between Pakistan and the IMF on the budget for the next fiscal year are ongoing and an important proposal was rejected during this time. The Tax Policy Office of the Ministry of Finance had proposed to abolish the tax on Intercorporate Dividend in the budget, but the IMF refused to accept it, after which the proposal was buried.

Intercorporate Dividend is actually the profit that one company of a corporate group gives to another company. The problem is that this profit is first taxed at the company level and then when this money is transferred to another company, it is taxed again. The Ministry of Finance wanted to solve this double taxation problem, but the IMF did not allow this concession due to the fear of reducing revenue.

Sources say that in the current circumstances, the chances of this proposal going forward are slim. This matter once again reminds us how decisive the role of the IMF is in Pakistan’s budget decisions at this time, whatever proposal the government brings, the final stamp is on the IMF.