All Provinces to Launch New IMF-Backed Property Tax in FY26 Budget

The International Monetary Fund (IMF) has acknowledged that all four provincial authorities are working to develop a harmonized property taxation framework, to commence in 2025-26 by transitioning from rent-based valuation to a capital valuation framework. According to the new IMF report, in a landmark step toward strengthening tax equity and broadening the tax base, the four provinces have amended their Agriculture Income Tax (AIT) regimes to fully align them with the federal personal income tax regime for small farmers and the corporate income tax regime for commercial agriculture (end-October 2024). The new tax regimes apply to income from January 1, 2025, with the tax liability for the second half of FY25 collected in September 2025. In collaboration with the World Bank and the IMF, provinces are developing comprehensive implementation plans to ensure effective enforcement of the new legal framework (new end-June 2025 SB), including measures to develop a strong approach to compliance (and identify under-reported income) and launch targeted communication campaigns. Provinces have also made notable progress transitioning the GST on services from a positive to a negative list approach, which will take effect at the start of FY26. While the negative list is not harmonized across provinces due to regional differences, bilateral agreements, and prior commitments of provincial governments, it includes primarily services covering essential sectors such as health and education, as well as government-provided services. Additionally, provincial authorities are working to develop a harmonized property taxation framework, to commence in 2025-26, by transitioning from rent-based valuation to a capital valuation framework. Provincial efforts will be discussed at the upcoming National Tax Council (NTC) meeting, scheduled for early April 2025, the report added.