IMF Proposes Crypto Tax for Pakistan's Bailout & Nation's Plan for AI Advancement
Summary:
The International Monetary Fund (IMF) suggested that Pakistan's Federal Board of Revenue (FBR) should apply Capital Gains Tax (CGT) to cryptocurrency transactions to qualify for a $3 billion bailout fund. The move was made as part of an effort to generate taxes on capital gains from real estate assets and prevent Pakistan's overinflated fiat economy from a potential debt default. Meanwhile, Pakistan is planning to produce one million AI-skilled IT graduates by 2027 and has set 15 objectives to achieve by 2028, assisted by a new National AI Fund.
The International Monetary Fund (IMF) has proposed that Pakistan's Federal Board of Revenue (FBR) apply Capital Gains Tax (CGT) to cryptocurrency transactions. This is a key condition for the nation's qualification for a $3 billion financial aid package. This proposal happened during discussions regarding a $3 billion stand-by arrangement (SBA) where the IMF suggested that Pakistan's central law enforcement agency, the FBR, should levy taxes on digital currency capital gains. Pakistan has also been guided to reassess the tax policies of real estate and publicly traded securities according to local media source, The News.
The IMF is pushing for an alteration in tax rates to generate annual taxes on capital gains from real estate assets, disregarding if the property is sold or not. Moreover, real estate developers might need to meet stricter documentation and reporting obligations, enforced by significant penalties for non-adherence, thereby putting new tax guidelines into action in the property market. Local sources infer that these IMF suggestions might be incorporated into the forthcoming financial aid agreement under the Extended Fund Facility (EFF). Consequently, Pakistan's fiscal plan for the financial year 2024-25 could potentially enact a rigorous cryptocurrency tax on capital gains.
The $3 billion financial aid package from the IMF aims to prevent Pakistan's overinflated fiat economy from defaulting on its debt. The current financial situation has arisen from geopolitical instabilities, natural disasters, and inconsistent domestic governance, among others.
The four-day-long IMF review commenced on March 14th. Approximately $1.1 billion will be released if Pakistan consents to these terms. The request to impose taxes on digital currency capital gains comes roughly a year after the Minister of State for Finance and Revenue, Aisha Ghaus Pasha, remarking that the nation would not legalize cryptocurrency trading.
Pakistan's cryptocurrency enthusiasts challenged the government's decision to prohibit crypto trading, a move that was based on the IMF's suggestion.
In other developments, Pakistan is investing in the field of artificial intelligence (AI) with the aim of producing one million AI-skilled IT graduates by the year 2027. The country's national AI policy draft indicates Pakistan's readiness to incorporate AI into public and national improvements. The country has established 15 objectives to be achieved between 2023 and 2028, and to aid these undertakings, Pakistan plans to create a National AI Fund using the Ministry of IT and Telecom’s "unutilized resources and funds.
Published At
3/18/2024 10:49:10 AM
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