CAP calls for urgent retail tax reforms
Haq also expressed concern at the immense level of double taxation in the system and called for major sales tax reforms. CREATIVE COMMONS
The Chainstore Association of Pakistan (CAP) has called for urgent reforms in the taxation of the retail sector to stimulate economic growth and ensure sustainable tax compliance. Chairman CAP Tariq Mehboob Rana and Senior Vice-Chairman Asfand Yar Faruukh highlighted that CAP represents over 200 tax-compliant Tier-1 retailers integrated with the FBR-POS (Federal Board of Revenue-Point of Sale) system. These retailers significantly contribute to the formal economy and provide direct employment to over 2,000,000 people, with many more jobs created indirectly, they stressed.
Despite efforts to rationalise retail sector taxation, an increasingly imbalanced environment has led to the closure of several integrated Tier-1 retailers and a reduction in physical retail networks over the past two years, said Rana. This has resulted in decreased employment and stagnation of domestic investment in branded retail.
The CAP office bearers suggested restoring the 12% GST rate for Integrated Tier-1 retailers and reviving the POS prize scheme for consumers. They explained that a rationalised GST rate would incentivise faster integration of Tier-1 retailers. Currently, integrated retailers generate 20-25% of their turnover in taxes, while undocumented retailers contribute almost nothing. Reintroducing the POS Prize Scheme will motivate consumers to purchase from Integrated Tier-1 retailers and verify sales invoices digitally, promoting compliance.
Commenting on the Tajir Dost Scheme (TDS), they also suggested transforming TDS into a simplified tax registration scheme for all retailers.
Published in The Express Tribune, June 4th, 2024.
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