Retailers push for tax reforms
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Pakistan's organised retail sector on Friday urged the government to overhaul the current retail taxation structure in the upcoming Finance Bill 2025-26, highlighting the need for fairer policies to support compliant businesses and expand the tax base.
In an appeal to Federal Minister for Finance Muhammad Aurangzeb, the Chainstore Association of Pakistan (CAP) — representing over 150 Tier-1 retail chains — called for inclusive policymaking through structured consultation with the private sector. CAP said the budget presents a key opportunity to address long-standing disparities and bring undocumented retailers into the tax net without penalising formal players. The association expressed confidence in the government's commitment to economic revival. CAP underscored the contributions of integrated retailers to employment, commerce, tax revenue, and exports, despite their small share in the overall retail sector.
Currently, POS-integrated retailers contribute around 25-30% of turnover in taxes under various heads, while most of the sector remains either under-taxed or undocumented. CAP warned this imbalance has placed an unsustainable burden on documented businesses, forcing many to downsize or shut down. CAP Chairman Asfandyar Farrukh said strict enforcement actions and unresolved technical issues in the FBR-POS system have disrupted compliant retailers. The removal of GST concessions last year and the failure of the Tajir Dost Scheme due to poor planning worsened matters.
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