The Consumer Associations of Pakistan (CAP) has urged for sweeping reforms in the taxation system for retailers, emphasizing the necessity to spur economic growth and ensure sustainable tax compliance. In a recent statement, CAP's Chairman Tariq Mehboob Rana and Senior Vice-Chairman Asfand Yar Faruukh highlighted the pivotal role played by over 200 tax-compliant Tier-1 Retailers integrated with the FBR-POS system in Pakistan's formal economy. These retailers not only contribute significantly to the economy but also provide direct employment to over 2,000,000 individuals, with numerous more jobs created indirectly. Despite efforts to streamline taxation in the retail sector, an increasingly imbalanced environment has led to the closure of several integrated Tier-1 retailers and a reduction in physical retail networks over the past two years, Rana stated. This downturn has resulted in decreased employment opportunities and a stagnation in domestic investment in branded retail. To address these challenges, CAP proposed several measures including restoring the 12% GST rate for Integrated Tier-1 Retailers and reviving the POS Prize Scheme for consumers.

They argued that a rationalized GST rate would incentivize faster integration of Tier-1 Retailers, who currently bear a disproportionate tax burden compared to undocumented retailers. Additionally, CAP recommended transforming the Tajir Dost Scheme (TDS) into a simplified tax registration scheme for all retailers, unlinked from cumbersome advance tax payment obligations. They suggested that retailers should be subject to normal taxation rather than additional advance tax payments, which often prove burdensome. Furthermore, CAP proposed implementing a fixed sales tax rate of 3% on retail transactions conducted via digital payments to curb the practice of fake invoices and encourage digital transactions, reducing cash usage and increasing documentation. As a reform-oriented trade body, CAP expressed its commitment to supporting the government's efforts to improve the economic situation and requested a meeting with the Finance Minister to discuss these proposals in detail, offering their full cooperation in implementing effective taxation policies.

Credit: Independent News Pakistan