Pakistani Govt to Tax Cryptocurrencies? Here’s why!

Pakistan is getting ready to receive the next tranche of $1.1 billion from the International Monetary Fund (IMF). As we know, the loan comes at a cost, and the borrower has to comply with Structural Adjustment Programs (SAPs), or, in simple words, the recommendations of the IMF. In this regard, the international lender wants Pakistan to widen the range of assets subject to taxation, including cryptocurrencies, to avail itself of the next tranche. It is pertinent to mention here that this is the final review of the $3 billion stand-by arrangement of the IMF.

As per credible sources, the IMF has recommended the Federal Board of Revenue (FBR) bring cryptocurrencies into the tax net by widening the scope of capital gains tax (CGT). Apart from cryptocurrencies, the IMF has suggested reviewing CGT slabs for the real estate industry and listed securities to confirm comprehensive taxation of all gains, without taking into account the asset holding duration.

The IMF also asked to bring either pension contributions or benefits under the tax net, eliminate the deduction of voluntary payments to workers’ participation funds, withdraw the exemption of pensions, and apply taxation using one of the underlined alternatives.

These recommendations could potentially be part of the upcoming bailout package under the Extended Fund Facility (EFF), with the FBR likely instructed to include them in the upcoming budget for FY2024-25 through the finance bill.