Chairman of the Chainstore Association of Pakistan (CAP) Rana Tariq Mehboob has called upon the government to preserve the 15% GST rate for Integrated Tier-1 Retailers, as proposed in the Finance Bill 2024. This plea comes amidst concerns that omitting S. No. 66 from the Eight Schedule of the Sales Tax Act 1990 could undermine recent strides in digital tax integration achieved through FBR-POS systems. In a press release issued today, CAP emphasized the pivotal role of digital tax systems in enhancing transparency and efficiency within Pakistan's retail sector. Mehboob highlighted that the integration of Tier-1 retailers with FBR-POS systems has bolstered tax compliance, benefiting over 2 million direct employees and supporting numerous ancillary sectors. However, CAP underscored the adverse impact of recent tax reforms, attributing closures of integrated retailers and reductions in physical retail networks to proposed GST rate hikes.

Mehboob stressed that maintaining a competitive tax environment is crucial for sustaining growth and investment in the formal retail sector. The press release further noted that while GST rates for key sectors like textiles and leather have risen to 15%, ongoing reform proposals threatening an increase to 18% risk eroding gains made in digitalization and compliance. CAP urged the government to incentivize FBR-POS integration with special concessions and discourage undue regulatory pressures on compliant retailers. The association also highlighted consumer-centric initiatives, like the POS prize scheme, as essential tools for promoting digital invoice verification and tax compliance among consumers. The outcome of these deliberations will shape the future landscape of retail taxation in Pakistan, influencing economic growth and regulatory dynamics within the sector.

Credit: Independent News Pakistan