Federal Minister for Finance and Revenue Miftah Ismail said that a fundamental mistake was made with the fixed tax regime, ultimately resulting in its retraction.
The minister revealed this while speaking at a press conference. Elaborating on why the fixed tax regime was discontinued, Miftah said that the traders whose electricity bills were around Rs. 2,000 were getting taxed at Rs. 3,000 under the new system and this was not the government’s intent.
Moreover, the minister said the situation worsened because the Federal Board of Revenue (FBR) was charging these small traders Rs. 6,000 as they were not on the Active Taxpayer List (ATL). The FBR reasoned that registering in the ATL is a 15-minute process, but the traders choose not to do it, added the minister.
Miftah said although it was a potential loss of Rs. 42 billion in tax revenue, given the situation at hand, we had to revert back to the old system.
Moreover, the finance minister said that Rs. 6 billion in fixed tax was collected last year, but that this year, although not the full amount, Rs. 27 billion would still be collected in fixed tax. Miftah added that a notification will soon be released in this regard.