The Federal Board of Revenue (FBR) is strategizing to launch a new fixed tax scheme based on the valuation of shops in a bid to bring 3.6 million retailers into the tax net. This move comes in the wake of the lackluster performance of the Tajir Dost Scheme, which saw only 44,830 retailers registering, raising concerns about the effectiveness of existing initiatives aimed at tax compliance within the retail sector.
Over the past three decades, various schemes designed to integrate retailers into the tax net have shown little success, reflecting the persistent challenge of tax evasion and non-compliance among retailers. Recognizing the need for innovative measures to yield tangible results, the FBR is considering the introduction of a fixed scheme based on shop valuation, aiming to provide a more compelling incentive for retailers to voluntarily declare their tax liabilities.
According to top official sources, the proposed fixed scheme is envisioned to incorporate different valuation slabs tailored to the diverse market landscapes in various cities, with the goal of simplifying the tax structure and encouraging greater participation from retailers. Notably, efforts to assess property valuations in key urban areas are already underway and are anticipated to be formalized in the coming month.
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While the specifics of the fixed scheme are still under review, the FBR is poised to roll out the scheme in the near future, potentially within the next week. The proposed initiative marks a departure from previous approaches, aiming to address the historic shortcomings that have hindered the inclusion of retailers in the tax net.
The underwhelming response to the Tajir Dost Scheme, which initially targeted six cities on a voluntary basis, underscored the systemic challenges in effectively engaging retailers for tax compliance. Despite subsequent efforts to boost enrollment through collaboration with trade representatives, the registration numbers have remained dismal, with only a fraction of the intended retailers opting to participate in the scheme.
The recurring struggles to enforce tax compliance among retailers have prompted the FBR to explore fresh strategies, particularly in light of the inadequacies in past IT-based solutions and ineffective enforcement measures. With a focus on enhancing revenue administration and optimizing tax collection mechanisms, the government is reaffirming its commitment to broader fiscal reforms, aligning with its obligations to the International Monetary Fund (IMF) and the imperative of sustaining long-term fiscal stability.
As the FBR gears up to launch the new fixed scheme for retailers, the forthcoming roadmap aims to establish a more accessible and streamlined framework for tax compliance, underscoring the government’s determination to foster a more inclusive and sustainable fiscal landscape. By incentivizing retailers to proactively declare their tax obligations through a simplified and equitable mechanism, the FBR endeavors to foster a culture of voluntary compliance while advancing the broader agenda of fiscal reform and revenue mobilization.
