Only two new retailers enter tax net under fixed scheme

The government's fixed tax scheme for small retailers has added only two new taxpayers to the tax net, according to figures reported by ProPakistani. The scheme has collected Rs26 million so far against an annual collection target of Rs50 billion.

Of 317 shopkeepers who joined, 315 were already part of the tax system, the outlet reported. One new participant is from Quetta and the other from Rawalpindi; another 44 new retailers have prepared returns but not yet filed them. Overall, 6,631 retailers prepared draft returns, but 6,587 were already filers.

Profit by Pakistan Today carried a headline saying 317 retailers joined the FBR's Aasaan Tax Scheme. ProPakistani's data placed that figure in the separate fixed tax scheme and said around 5,000 retailers registered for the Aasaan facility, of whom only 332 filed returns and paid Rs26.5 million in taxes. The two outlets' descriptions of the scheme differ, but both reported only two new taxpayers.

Rawalpindi had the highest fixed-scheme participation at 87 retailers, with only one new filer, ProPakistani said. Lahore had 61, Karachi 24, Sahiwal 33, Sialkot 25 and Islamabad 23.

The Federal Board of Revenue is preparing to penalise registered retailers who do not choose either option available under the scheme. Penalties will be Rs10,000 for the first month of non-compliance, Rs25,000 for the second and Rs50,000 for the third, under terms agreed with traders' representatives.

The fixed tax scheme taxes eligible small retailers at 1 percent of annual sales. Participants are exempt from audits, point-of-sale installation and withholding agent obligations. FBR staff are barred from entering covered premises. The scheme applies to single-outlet retailers whose annual sales stayed below Rs200 million in each of the past three consecutive years.

The legal deadline for returns is September 30. At a meeting chaired by Minister of State for Finance Bilal Azhar Kayani, officials agreed to increase awareness and directed tax commissioners to coordinate with local tax bars to help retailers file through lawyers of their choice.

The weak retailer response came as income tax filing overall increased. The FBR has received 3.5 million returns this year, compared with 2.5 million in the same period last year, with about Rs10 billion paid with those returns.