Pakistan will impose an extra one-time 10% tax on large scale industry for one year to raise over 400 billion Pakistani rupees ($1.93 billion) to clinch a crucial deal from the International Monetary Fund, Finance Minister Miftah Ismail said on Friday, reports Reuters.
The announcement comes ahead of what Pakistan hopes will be an agreement to unlock a new tranche of IMF funds which are needed to avert a balance of payment crisis.
"Let me share this good news that this country isn't heading toward a default anymore," the finance minister told parliament in his concluding budget speech that brought in the new taxes.
"We've taken very difficult decisions," he said.
Ismail called it a super tax, pleading with large scale industry to bear with it for just one year to help shore up revenues urgently required to cut the fiscal deficit.
He said tax will be levied on 13 big industries, companies and corporations, including sugar, steel, cement, oil and gas, fertiliser, cigarettes, chemical, automobiles, banks, textile, LNG terminals and beverages, which have earnings exceeding 300 million Pakistani rupee ($1.45 million).
"So, their tax rates will go from 29% to 39%," he clarified separately in a tweet.
But, he said there will be a blanket 4% super tax on all industry.
"Please, contribute your share just for one year. We desperately need it this year," Ismail appealed to the industrialists in his parliament speech.
Pakistan's KSE 100 share index fell 4.8% on Friday after the government announced the tax rise.
Ismail said a revised budget will raise the revenue collection target to 7.4 trillion rupees from 7 trillion rupees after the tax imposition.
He said a one-time tax slab from 10% to 40% will also be introduced on individual earnings from 150 million rupees to 400 million rupees a year.
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