PM Shehbaz Refuses to Waive 18% Sales Tax for Exporters to Avoid IMF Pushback

Prime Minister Shehbaz Sharif has refused to waive the 18 percent sales tax on local supplies of raw materials, commodities, and machinery to registered exporters to avoid any reaction from the International Monetary Fund (IMF). The decision was taken at a meeting in Islamabad on Thursday, shortly before the PM’s departure to Belarus, reported ExpressTribune. Currently, exporters pay 18 percent GST on locally procured inputs but face no tax on imports under the Export Facilitation Scheme (EFS). This has led many to prefer imports. PM Sharif rejected a similar suggestion by Finance Minister Muhammad Aurangzeb to raise the matter again with the IMF. The Fund had earlier insisted on the imposition of this tax. Despite a prior budget promise to retain zero-rating under EFS, the tax remains in place nine months later. The PM directed officials to consult trade bodies and protect local industries in the upcoming budget. The planning minister will now seek consensus on addressing the tax disparity without breaching IMF conditions.