'Pakistan's agri-tax among highest in region'
Listen to article
The Institute of Cost and Management Accountants of Pakistan (ICMA) has released a report in its latest issue of the ICMA Economic Intelligence, highlighting the significant challenges of enforcing the newly introduced agricultural income tax.
The tax, implemented under the International Monetary Fund (IMF) conditions, has rates between 15% and 45%, with a 10% super tax on high-income landowners. This makes Pakistan's agricultural tax among the highest in the region, surpassing neighbouring countries like India, Bangladesh and Sri Lanka.
The report emphasised the difficulties in enforcement due to outdated land records, fluctuating farm incomes, weak tax collection mechanisms and political resistance. Small farmers are particularly vulnerable, with the risk of higher product prices and inflation.
ICMA suggested a gradual implementation, starting with large landowners, and called for modernising land records, enhancing digital tools and providing incentives to improve compliance.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
24-05-2025
- Business Recorder
ICMA conducts SWOT analysis of Islamic banking sector
KARACHI: The Institute of Cost and Management Accountants of Pakistan (ICMA) has conducted a detailed SWOT analysis of Pakistan's Islamic banking sector, highlighting its rapid growth, key challenges, and future potential as the country moves toward full Shariah compliance by 2027. According to the State Bank of Pakistan (SBP) data for September 2024, Islamic banking assets grew by 17.4% year-on-year to Rs. 9,881 billion. Deposits increased by 23.3% to Rs. 7,596 billion, net financing rose by 7.5% to Rs. 3,252 billion, and investments grew by 22.3% to Rs. 4,803 billion. Islamic banking now represents 19% of the total banking industry's assets and 23.2% of deposits. Islamic banks have shown greater resilience during economic downturns due to their asset-backed financing model, which provides more stability compared to interest-based conventional banks. A landmark achievement was the Rs. 50 billion (USD 170 million) raised by Lucky Investments Limited in a single day through the IPO of its Lucky Islamic Money Market Fund — the largest Shariah-compliant mutual fund launch in Pakistan's history. Key Islamic banks such as Meezan Bank, Al Baraka Bank, Faysal Bank, and BankIslami are expanding their branch networks and customer base across the country. These banks enjoy strong public trust by offering a diverse range of Shariah-compliant financial products. Despite these strengths, the sector faces challenges including a shortage of trained Shariah scholars and Islamic finance professionals, limited public awareness and financial literacy, and gaps in legal and regulatory frameworks for full Shariah implementation. Additionally, product innovation and technology adoption lag behind conventional banks, and Islamic banking penetration remains low in rural areas and among small businesses. Looking forward, Pakistan's Islamic banking sector has strong growth opportunities. The government's goal of fully Islamizing the banking sector by 2027 will open new markets. Emerging areas such as Islamic fintech, Takaful (Islamic insurance), and Sukuk (Islamic bonds), combined with rising global demand for ethical finance, will support this growth. Strategic partnerships and investments from Gulf and Southeast Asian economies, along with government incentives for Islamic finance development, add further momentum. However, the sector must navigate threats such as competition from conventional banks offering Islamic windows, potential delays in legal reforms, macroeconomic instability, and global financial regulations that may not align with Islamic banking principles. There is also the risk of reputational damage if Shariah compliance or governance standards are not rigorously maintained. ICMA stresses that addressing these challenges through stronger regulation, enhanced public education, and faster technological innovation will help Pakistan's Islamic banking sector reach its target of a 30% market share by 2025. This growth is essential to promote financial inclusion and support Pakistan's overall economic development.
Business Recorder
23-05-2025
- Business Recorder
NA passes ‘Off the Grid (CPP) Levy Bill'
ISLAMABAD: The National Assembly, Thursday, passed, 'The Off the Grid (Captive Power Plants) Levy Bill, 2025', which states that the rate of levy shall be increased by five percent immediately and further increased to 10 percent by July 2025, 15 percent by February 2026 and 20 percent by August 2026. Federal Minister for Petroleum Ali Pervaiz Malik, presented this money bill in the Lower House of the Parliament for passage, the opposition members opposed it. The House passed the bill with majority. Senate body approves Off-the-Grid (CPPs) Levy Bill, 2025 The clause 03 of the bill states, 'Imposition and collection of levy. - (1) Subject to section 4, every captive power plant shallpay to the federal government a levy on consumption of natural gas or RLNG, over and above the sale price notified under section 8 and section 43B of the Oil and Gas Regulatory Authority Ordinance, 2002, at such rate as notified by the federal government in the official Gazette, from time to time.(2) The agent shall be responsible for billing of levy to captive power plants, its collection and onward payment to the federal government in the manner as may be prescribed.' The clause 04 of the bill further reads, 'Calculation of rate of levy. - Before notifying the levy under sub-section (1) of section 3,the divisions concerned under the Rules of Business, 1973 shall calculate the rate of levy by taking into account the difference of power tariff of industrial B3 category, notified by Nepra, and the self-power generation cost of the captive power plant at the gas tariff notified by OGRA: Provided that the rate of levy shall be increased by five percent immediately and further increased to ten percent by July, 2025, fifteen percent by February, 2026 and twenty percent by August, 2026.' About the utilisation of levy, clause 05 of the bill, says, '(1) The levy shall be utilized by the Federal Government for reduction of power generation tariff for all consumer categories of the power sector.(2) An annual report in respect of the utilization of the levy shall be laid before both the Houses of Majlis-e-Shoora (Parliament) after three months from the end of each fiscal year.' The clause 06 of the bill states:'Consequences for non-payment of levy. - (1) If the amount of levy is not paid within the specified time by the captive power plant, the same shall be recoverable under sub-section (2) and incase of persistent default in payment, the agent shall terminate the gas supplies to the defaulted captive power plant.(2) The amount of levy due but not paid within the time allowed shall be recoverable under the provisions of the Public Finance Management Act, 2019.' Moreover, clause 07 of the bill explains, 'Allowance to be made for levy for purposes of Income Tax. - The levy paid by a captive power plant shall be an expenditure for which allowance is to be made under the Income TaxOrdinance,2001 in computing its profits or gains.' To remove any difficulty for implementation on the law, clause 10 of the bill gives power to the president of Pakistan to settle it. Furthermore, Clause 10 of the bill states, 'Removal of difficulties. - If any difficulty arises in giving effect to the provisions of this Act, the President may make an order, not inconsistent with the provisions of this Act, to remove the difficulty.' Copyright Business Recorder, 2025
Express Tribune
17-05-2025
- Express Tribune
UN projects Pakistan economy to grow by 2.3%
Development of SMEs, youth entrepreneurship, and rigorous economic diplomacy would be vital for the quick revival of the economy, regional expert Dr Mehmoodul Hassan Khan said. photo: file Pakistan is expected to experience "moderate growth, stabilising after a period of economic contraction", with its Gross Domestic Product (GDP) projected to expand by 2.3 per cent in 2025, according to a major United Nations report. The report, titled 'The UN World Economic Situation and Prospects 2025' and released a day ago, noted that declining inflation has allowed most of the South Asian region's central banks to commence or continue monetary easing in 2025. Meanwhile, Pakistan, Bangladesh and Sri Lanka are expected to continue fiscal consolidation and economic reforms under International Monetary Fund programmes. It said that the near-term outlook for South Asia was expected to remain robust, with growth projected at 5.7pc in 2025 and 6pc in 2026, "driven by strong performance in India as well as economic recovery in a few other economies", including Bhutan, Nepal and Sri Lanka.
