Pakistan has declined earlier proposals to raise taxes on fertilizers and agricultural pesticides, prompting the government and the International Monetary Fund (IMF) to explore alternative revenue measures targeting sectors like solar panels and internet services in case of fiscal shortfalls. These potential “emergency tax measures” are expected to be part of the IMF’s second review report, which will be released after the Fund’s Executive Board approves a $1 billion tranche for Pakistan.
The new taxes would only be introduced if the government fails to achieve its revenue targets for the first half of the fiscal year (July to December) or if spending controls do not meet agreed limits. The Federal Board of Revenue (FBR) has submitted a list of options to the IMF, including a proposed increase in the General Sales Tax (GST) on imported solar panels from 10% to 18%, set to take effect in January 2026 if additional revenue is required. Additionally, the government is considering raising the withholding tax on internet services from 15% to a range of 18% to 20%.
According to FBR estimates, imported solar panels could add between 25,000 and 30,000 megawatts of electricity generation capacity over the next few years. Currently, rooftop solar installations produce about 6,000 megawatts, a figure expected to double soon as more consumers adopt solar energy to lessen reliance on the national grid.