Pakistan launches fixed tax scheme for small retailers
- Govt to impose 1% tax on annual retail sales up to Rs200mn
In a bid to widen the tax net, Pakistan government introduced on Friday a fixed tax scheme for small retailers, under which a 1% tax will be imposed on annual retail sales worth up to Rs200 million.
The development was disclosed by Finance Minister Muhammad Aurangzeb, flanked by Minister of State Bilal Azhar Kayani, in a press conference.
“Our tax system needs to become more transparent and move on a sustainable footing,” said Aurangzeb.
“We need to reduce the tax rate,” the finance minister said, admitting that several sectors, including the documented corporate sector and the salaried class, are facing a “disproportionate tax burden”.
He said that today’s measure targets small retailers, which make up around 3-4 million shopkeepers. “It is an important milestone in terms of expanding our tax net,” he said.
The finance minister said that despite tensions in the Middle East, the country’s economy remained stable. “We overcome our challenges via our own resources, and didn’t take assistance from anyone,” he shared.
Explaining the tax scheme, Kayani said that the scheme would be applicable to retailers having an annual turnover of Rs200 million or less. Under the scheme, a 1% tax would be imposed on the retailer’s annual turnover.
“With Holding Tax (WHT), which is already deducted, will be adjusted in this tax,” said the state minister. “However, at the time of form submission, the retailer will have to pay at least Rs25,000,” he added.
The state minister said that this is an optional scheme for the retailer, but they will avail several benefits from it, including exemption from FBR’s POS requirement and audit.
“Retailers, including both non-filers and filers, can avail this scheme.”
He warned that retailers who fail to get registered in the fixed tax scheme or in the normal tax regime would be penalised.
Moreover, street cart sellers remain exempt from this scheme, he shared.
Kayani said that the scheme is being introduced after consultation with trade associations.
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