Silver City News Desk — Pakistani consumers could soon face steeper costs for internet services and solar panel installations as the government explores new revenue-generating measures in coordination with the International Monetary Fund.
Background on Tax Proposals
Following the rejection of earlier plans to impose higher taxes on fertilizers and agricultural pesticides, authorities are now considering alternative revenue sources. These contingency measures are being discussed as part of Pakistan’s ongoing IMF program and may be activated if tax collection targets are not met.
The proposed tax adjustments are expected to feature in the IMF’s second review report, scheduled for release after the Executive Board approves a $1 billion loan disbursement.
What Could Change
According to documents submitted by the Federal Board of Revenue to the IMF, two key sectors are under consideration:
Solar Energy Equipment: The General Sales Tax on imported solar panels could increase from the current 10% to 18%, potentially taking effect in January 2026. This adjustment would apply only if revenue collection falls significantly short of targets during the July-December period, or if expenditure control measures prove insufficient.
Internet Services: Withholding tax on internet services may rise from the existing 15% rate to somewhere between 18% and 20%, though final rates have not been confirmed.
The Solar Energy Dilemma
Pakistan’s solar energy sector has experienced remarkable growth in recent years. Current rooftop installations are generating approximately 6,000 megawatts of electricity, with projections suggesting this capacity could double in the near future. FBR estimates indicate that imported solar panels could contribute between 25,000 and 30,000 megawatts to the national energy mix.
However, this expansion has created an unexpected challenge. As more households and businesses shift to solar power, reduced demand from the national grid has led to increased capacity payment obligations—costs the government must pay to power producers regardless of whether their electricity is used. These payments are projected to reach Rs1.7 trillion this fiscal year.
Government officials acknowledge they are seeking strategies to moderate the pace of solar adoption to manage these escalating capacity charges.
When Would These Measures Take Effect?
It’s important to note that these tax increases are contingency measures—they would only be implemented if:
- Revenue collection in the first half of the fiscal year significantly undershoots agreed targets
- The Ministry of Finance cannot adequately control government expenditures
The measures represent a backup plan rather than confirmed policy at this stage.
This is a developing story. Silver City will continue monitoring these proposals and their potential impact on consumers.
