CVT on foreign assets may go: Rs400-500bn tax measures cleared after IMF nod

ISLAMABAD: After approval of the International Monetary Fund (IMF), the federal government has approved new tax policy measures/schemes and enforcement as well as administrative measures for the next fiscal year (2026-27) of over Rs 400-500 billion including possible withdrawal of capital value tax (CVT) on foreign assets.

The policy measures and enforcement actions have been approved after meeting with the International Monetary Fund (IMF).

All these measures would be applicable from July 1, 2026 following approval of the Parliament.

The “filers” and “non-filers” would be further separated in 2026-27 through digitally processes for the purpose of taxation through banks.

READ MORE: Revenue target in FY27 budget: Govt mulls Rs780bn enforcement measures instead of new taxes

Sources said that the Prime Minister Shehbaz Sharif has strictly directed the Federal Board of Revenue (FBR) to ensure effectively utilization of data under the enforcement actions to be taken against non-complaint persons tax evaders and non-filers in 2026-27.

Special attention would be paid to use banking data for the purpose of broadening the tax base.

The enforcement measure would generate at least Rs 100 billion in 2026-27 with the help of banks.

Presently, the banks are bound to provide data to the FBR under section 165/165(A) of the Income Tax Ordinance 2001. The reporting of data by the banks to the FBR is in manual forms which would be replaced with the online access to central database of banks. The online banks data would be assessed by the FBR under the enforcement measures for the next fiscal year.

However, the Super Tax would not be withdrawn in coming budget (2026-27) in one go. However, it would be phased out in the next 2-3 years. The Super Tax will not be abolished in coming budget.

The final decision on withdrawal of CVT on foreign assets is yet be to be taken, however, there is an agreement to abolish the said CVT.

The CVT was imposed in year 2022 and requires payment of one percent every year to the Federal Board of Revenue (FBR) on the assets outside Pakistan.

The tax on inter-corporate dividends would be retained in 2026-27, sources said.

The FBR will enforce system of digital invoicing with full force in 2026-27. The FBR will generate Rs 100 billion from digital invoicing system in 2026-27. From July 1, 2026, only digitally issued invoices would be accepted. The manual sales tax invoices would not be accepted from the next fiscal year.

To give relief to the general masses, the government will include over 20-25 items on which tax would be charged on the basis of printed retail price at the stage of manufactures. Presently, this schedule contains 37 items on which sales tax is charged on the basis of printed retail price.

The FBR will generate another Rs 100 billion from the expansion of the Third Schedule of the Sales Tax Act. The IMF has endorsed the government’s recommendation to expand the Third Schedule of the Sales Tax Act including fast moving consumer goods (FMCG) items. It has been agreed that the ketchup, infant formula, milk and dairy products, cooking oil and other FMCG products would be included third schedule of the Sales Tax Act in budget 2026-27.

A very simple and practical scheme for retailers/shopkeepers would generate Rs 100 billion in 2026-27. The new scheme would be applicable on retailers upto Rs 250 million annual turnover and tax would be charged on the basis of electricity bills.

Tier-I retailers would not be covered under the new scheme. Other features of the scheme are being finalized in coming days, they added.

Copyright Business Recorder, 2026