IMF Urges Pakistan to Apply Taxes on Cryptocurrency and Real Estate
By
March 19, 2024
The IMF has advised Pakistan’s tax authority, the Federal Board of Revenue (FBR), to widen the Capital Gains Tax (CGT) to cover cryptocurrencies, as reported by The News. This recommendation comes as part of ongoing discussions between the IMF and Pakistani authorities regarding the $3 billion stand-by arrangement (SBA).
If the ongoing four-day review, which started on Thursday, is successful, it could prevent a sovereign debt default by releasing the last tranche of about $1.1 billion secured by Islamabad last summer.
Moreover, the IMF has suggested that property developers should legally monitor and document transactions made before property titles are fully completed and registered, with potential consequences for non-compliance.
These proposals from the IMF might be included in the next bailout package under the Extended Fund Facility (EFF), potentially becoming part of the finance bill for the FY2024–2025 budget.
The IMF also highlighted challenges in taxing capital gains from real estate transactions due to delays in property registration. Additionally, it recommended taxing new financial investments like cryptocurrencies and suggested taxing capital gains on listed securities and real estate regardless of how long they are held. Finally, it proposed expanding the definition of ‘personal movable property’ in the Income Tax Ordinance to cover a broader range of investment items.
