The International Monetary Fund (IMF) wants the Federal Board of Revenue (FBR) to explain how much time it needs to introduce a scheme to add 3 million retailers to the tax net.
The FBR informed the IMF that the final decision lies with the new finance minister expected to be nominated soon. The FBR assured that the scheme is ready for implementation pending government approval.
During a virtual meeting led by IMF Mission Chief Nathan Porter and attended by FBR officials, the IMF sought insights into the FBR’s strategy to achieve the targeted revenue of Rs. 9,415 billion by June 30, 2024.
Sources reveal that the IMF also questioned the FBR’s capacity to tax 3 million retailers, to which the FBR explained its deployment of 147 district officers nationwide to expand the tax base. However, handling such a substantial number of potential taxpayers with limited resources poses significant challenges.
Furthermore, the FBR assured the IMF of meeting the tax collection target of Rs879 billion for March 2024. Given the shortfall of Rs33 billion in February 2024, achieving this monthly target is crucial to prevent additional tax burdens for the remainder of the fiscal year.
The FBR has devised a simplified scheme, including the development of the “Tajir Dost” mobile app by PRAL, a subsidiary of the FBR, for national business registration. The scheme proposes using annual rental values to determine indicative income for tax purposes, aiming to streamline tax filing for retailers.
Efforts are also underway to incorporate online retailers into the tax system, with consultations ongoing with platforms such as Daraz. However, details on how online retailers will be taxed remain to be seen.
The scheme offers no special tax rates for retailers except for early bird and lump sum payment discounts. The Tajir Dost app aims to simplify tax procedures for retailers while ensuring compliance.
Income tax paid under the scheme will be treated as an advance tax, with no refunds. Defaulters may face penalties, including shop closure or monetary fines.
The scheme excludes certain entities like national or international chain stores but encompasses other Tier-I retailers.
