Plan devised to slap tax on retailers, will generate Rs300bn
Business
Scheme will first be implemented in Islamabad and the four provincial capitals
ISLAMABAD (Dunya News/Web Desk) – A decision has been to impose retailers tax across the country, sources in the FBR (Federal Bureau of Revenue) say, as the plan would be first be executed in five large cities of Pakistan – a move that has been demanded by different circles so that the taxation burden could be shared.
According to the sources, the plan aims to bring the retailers in Karachi, Lahore, Islamabad, Peshawar and Quetta into tax net as first phase of the overall plan, which is to be implemented once the federal government gives its approval.
The FBR has developed a comprehensive scheme to cover the 3.5 million retailers in Pakistan, which is expected to generate an additional Rs300 billion in revenue.
However, the sources, the first phase will allow the government to enhance revenue collection by Rs100 billion based upon each establishment’s size and annual income.
Meanwhile, tax collection would be on the monthly basis as a 10 per cent advance tax – calculated on the basis of annual income – is supposed to slapped on retailers.
On the other hand, the proposed tax is applicable to all the businesses and individuals associated with any kind of retailing.
The much-anticipated scheme comes as the retail sector – along with real estate, agriculture and professionals – hasn’t be brought into the tax net despite Pakistan having an alarmingly low tax-to-GDP ratio.
In this scenario, the corporate sector, salaried classes as well as international financial institutions like the World Bank and the International Monetary Fund (IMF) have been demanding Islamabad to broaden the tax base for an enhanced revenue collection.
The IMF programme, in fact, is revolving the very idea of increased revenue generation and reduced government spending with an aim to control fiscal deficit. Hence, increase in energy tariffs is an essential part of the IMF conditions – a move that has fuelled inflation to record-high levels.
