Big retailers demand end to tier system

Call for overhaul of POS system by removing technical issues

LAHORE:

Large retailers have called on the government to simplify the sales tax regime, especially for the integrated small and medium-sized retailers, and do away with the categories of tier-1 retailers and other-than-tier-1 retailers. They have also asked the government to register all retailers, except for those exempted from income tax.

In its budget proposals sent to Federal Finance Minister Miftah Ismail, the Chainstore Association of Pakistan stated that the organised retail sector believes in digitalisation of the economy and, compared to the past years, a holistic and consistent approach to reforms was crucial.

“Only the implementation of all recommendations will ensure a faster pace of documentation and revenue generation from the entire retail sector,” said the trade body. At the time of last year’s federal budget, an additional Rs50 billion in sales tax collection was envisaged by the then finance minister, Shaukat Tarin, it recalled.

However, “so far only an estimated Rs3 billion in additional sales tax has been collected by the FBR in the past 10 months”. Association Chairman Tariq Mehboob stated that the proposals had been formulated after lengthy consultations with the leading accountancy firms and a large number of stakeholders.

First, according to the association, sales tax registration should be made compulsory for all retailers except where a retailer is exempt from income tax, thereby only the smallest retailer will be exempt from sales tax registration.

Furthermore, according to the trade body, the government should ensure an even playing field and the counterproductive categorisation of retailers into tier-1 and other-than-tier-1 should be abolished. “This will ensure that the retailers of all sizes, regardless of the goods supplied, integrate/ report their full sales on a real-time basis through the overhaul of current FBR-Point of Sales (POS) system, making it easy to use and removing technical issues.