Pakistan, IMF Discuss Higher Tax on Solar Panels and Internet Services
Pakistan and the International Monetary Fund (IMF) are exploring new tax options to boost revenue. These include possible increases in taxes on solar panels and internet services.
The discussions follow the rejection of earlier proposals to raise taxes on fertiliser and pesticides. According to The News, these measures could be introduced if the government fails to meet its revenue targets.
The Federal Board of Revenue (FBR) shared several contingency tax plans with the IMF. One plan proposes raising the General Sales Tax on imported solar panels from 10% to 18% starting January 2026. Another plan suggests lifting the withholding tax on internet services from 15% to up to 20%.
Impact and Concerns
Officials say these steps would only apply if revenue shortfalls exceed expectations or if spending cuts fall short. The IMF’s second review report, which follows approval of a $1 billion loan tranche, will include these proposals.
The government believes the growing use of rooftop solar panels reduces reliance on the national grid. However, it also increases “capacity payments” for unused electricity, costing around Rs1.7 trillion this fiscal year.
FBR data shows rooftop solar systems now produce 6,000 MW of power and could double soon. Imported panels could generate 25,000 to 30,000 MW in the future. Therefore, the government sees a higher GST as a potential source of extra income.
Pakistan has already missed its first-quarter revenue target by Rs198 billion. It now needs to collect Rs6.7 trillion by December 2025. Increasing GST on imported panels could add up to Rs30 billion in revenue.
Telecom experts, however, warn that higher internet taxes would make connectivity more expensive for low-income users. They stress that access to affordable internet is vital for education, healthcare, and employment.
As a result, raising taxes could deepen the digital divide, especially in rural areas. Both sides continue talks to balance fiscal needs with social inclusion.
