With Pakistan rejecting earlier proposals to increase taxes on fertilizers and agricultural pesticides, the government and the International Monetary Fund (IMF) are now turning their attention toward other potential revenue sources including solar panels and internet services.
According to government insiders, these possible “emergency tax measures” could feature in the IMF’s upcoming second review report, which is expected to be released after the Fund’s Executive Board approves a $1 billion tranche for Pakistan. The new levies would only take effect if the government fails to meet its revenue collection goals for the first half of the fiscal year (July–December) or if spending cuts fall short of targets agreed with the IMF.
Sources reveal that the Federal Board of Revenue (FBR) has already shared several options with the IMF. One proposal suggests increasing the General Sales Tax (GST) on imported solar panels from the current 10% to 18%, effective January 2026, in case additional funds are needed. Another recommendation involves raising the withholding tax on internet services from 15% to as high as 18–20%.
FBR officials estimate that imported solar panels could help generate an additional 25,000 to 30,000 megawatts of electricity capacity in the coming years. Currently, rooftop solar installations produce around 6,000 megawatts a figure expected to double soon as more consumers turn to renewable energy to reduce their reliance on the national grid.
However, the rapid expansion of solar energy has raised concerns among policymakers. As more households and businesses adopt off-grid solutions, the government continues to face rising capacity payments to power producers fixed payments made regardless of actual electricity consumption. These payments are projected to reach an alarming Rs1.7 trillion this fiscal year.
The IMF’s proposed tax adjustments underscore the difficult balancing act Pakistan’s economic managers must perform: boosting revenue without stifling growth in key sectors. If implemented, the new taxes could have far-reaching consequences for consumers and industries alike, particularly those investing in clean energy and digital connectivity.
