Internet and Solar Panels Likely to Get More Expensive After New IMF Demands

With the rejection of proposals to increase taxes on fertilizers and agricultural pesticides, Pakistan and the International Monetary Fund (IMF) are now weighing alternative tax hikes on sectors such as solar panels and internet services to shore up government revenues if collections fall short. Sources say these “emergency tax measures” are expected to be included in the IMF’s upcoming second review report, which will be released after the Fund’s Executive Board approves the disbursement of a $1 billion tranche. The measures would only be triggered if revenue shortfalls in the first half of the fiscal year (July–December) exceed agreed limits, or if the Ministry of Finance fails to rein in expenditures. According to proposals submitted by the Federal Board of Revenue (FBR) to the IMF, the government could raise the General Sales Tax (GST) on imported solar panels from 10% to 18% starting January 2026, if needed. There is also consideration of increasing the withholding tax on internet services from 15% to as much as 18% or 20%. FBR estimates suggest that imported solar panels could add 25,000 to 30,000 megawatts of electricity generation capacity in the coming years. Currently, rooftop solar installations are producing 6,000 megawatts, a figure that could double rapidly. Officials say the government is seeking ways to limit the rapid expansion of solar energy, as reduced reliance on the national grid is driving up capacity payments, which are projected to reach Rs1.7 trillion this fiscal year.