In order to increase revenue as it works to complete a bailout agreement with the International Monetary Fund, Pakistan presented a number of proposed new taxes across broad swaths of the economy, including an additional one-time “super” levy on large enterprises.
The announcement was made by the prime minister of Pakistan, Shehbaz Sharif, in a speech that was broadcast on television on Friday. The announcement comes as the South Asian country struggles with declining reserves, a weakening currency, and rising inflation, which has increased the urgency for securing an IMF bailout.
“Tough decisions will save Pakistan’s economy from default,” Sharif said. “We are hopeful we will reach an agreement with the IMF.”
Following the tax announcement, the benchmark KSE100 index plunged by 4.8 percent, while the KSE30 index fell by as high as 5.6 percent.
A major component of Friday’s statement was a 10-percentage-point tax rise for a year on 13 businesses, increasing their rates to 39 percent. These industries included cement, steel, sugar, oil and gas, textiles, banking, cigarettes, chemicals, and beverage corporations. For wealthy earnings, real estate, car dealers, jewellers, retailers, and others, additional new fixed taxes are envisaged.