The government has decided to introduce a new fixed tax scheme for retailers in the upcoming federal budget as part of efforts to bring the retail sector into the tax net, sources in the Federal Board of Revenue (FBR) said.
According to sources, the new fixed tax scheme will be implemented nationwide and is aimed at increasing tax compliance among retailers across the country.
The proposal is expected to be presented to the International Monetary Fund (IMF) next week for final approval during negotiations on tax reforms and revenue measures.
Under the proposed scheme, retailers with an annual business turnover of up to Rs. 200 million will be required to register with the tax authorities.
Sources said retailers falling under the scheme will have to pay a fixed tax of 1 percent on annual turnover of up to Rs. 200 million.
FBR sources further revealed that the entire scheme has been prepared in Urdu to make it easier for small traders and retailers to understand and comply with the tax requirements.
Unlike previous proposals, the new scheme will not include the size or area of shops as a criterion for taxation.
The government is targeting the registration of around three million retailers under the new tax framework, sources added.
Officials said the government plans to keep tax rates and targets relatively low in the initial phase to encourage maximum registration and documentation of the retail sector in the upcoming budget.
