Latest news with #FBR-POS
Express Tribune
3 days ago
- Business
- Express Tribune
Retailers push for tax reforms
Listen to article 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.
Business Recorder
4 days ago
- Business
- Business Recorder
Finance Bill 2025–26: CAP urges govt to overhaul retail tax structure
LAHORE: Pakistan's organized retail sector on Friday urged the government to overhaul the current retail taxation structure in the upcoming Finance Bill 2025–26, highlighting the urgent need for fairer policies to support compliant businesses and expand the tax base. In a detailed appeal to Federal Minister for Finance Muhammad Aurangzeb, the Chainstore Association of Pakistan (CAP)—the official representative body for over 150 Tier-1 retail chains—called for inclusive policy-making through structured consultation with the private sector. CAP stressed that the upcoming budget presents a critical opportunity to resolve long-standing disparities and bring undocumented retailers into the tax net without penalizing compliant players. CAP acknowledged the Finance Minister's leadership and reiterated its confidence in the government's commitment to reviving the economy. The association underscored the significant contributions of integrated retailers to employment, commerce, tax revenues, and export value chains, despite representing only a fraction of the retail and wholesale trade landscape. At present, POS-integrated retailers contribute approximately 25–30% of their turnover in taxes under various heads. Meanwhile, the vast majority of the retail sector remains either under-taxed or entirely undocumented. CAP warned that this growing imbalance has placed an unsustainable burden on documented businesses, many of whom have been forced to downsize or shut down in recent years. CAP Chairman Asfandyar Farrukh noted that strict enforcement actions and unresolved technical issues in the FBR-POS system have further disrupted operations for compliant retailers. The withdrawal of GST concessions for documented consumers last year, coupled with the failure of the Tajir Dost Scheme due to a lack of consultation and planning, has only worsened the situation. 'To prevent another setback, the Finance Bill 2025–26 must introduce bold, technology-led solutions that broaden the tax base without penalizing formal businesses,' Farrukh emphasized. To drive formalization and promote a cashless economy, CAP proposed fixed GST rates on retail sales made via digital payments 1–2% for consumer goods and 3–4% for textile and leather items. These rates should be extended to all tiers of retailers, including small and mid-sized enterprises, along with simplified compliance measures and alignment with provincial digital payment incentives. CAP maintains that such a framework will reduce costs, encourage documentation, and accelerate tax collection. The association also recommended a fixed quarterly advance income tax regime for small retailers, payable via mobile wallets and adjustable against annual income tax returns. Predictable rates for 3–5 years, coupled with incentives such as government service privileges or cash back offers, would increase voluntary compliance and build trust. To reignite consumer engagement in tax compliance, CAP urged the government to revive the FBR-POS Prize Scheme, which has been suspended since November 2022. Additionally, the association demanded transparency in the use of the over Rs1.2 billion collected through the POS Re1 per invoice fee under the IRS Common Pool Fund. Despite their large contributions, organized retailers remain restricted to just 10% of Pakistan's retail sector, compared to 15–20% in comparable regional economies. CAP warned that unchecked informal competition, coupled with rising compliance costs, continues to hamper sector growth. The association reiterated its readiness to collaborate with government institutions, including the Ministry of Commerce, FBR, SBP, CCP, and others, to support the development of a fair, digital, and growth-oriented retail tax ecosystem. A formal meeting has been requested with the Finance Minister to present CAP's proposals and assist in shaping meaningful reforms in Budget 2025–26. Copyright Business Recorder, 2025
Business Recorder
18-05-2025
- Business
- Business Recorder
Failures in POS integration system: Chainstore Association concerned at deteriorating environment for tax-compliant retailers
LAHORE: The Chainstore Association of Pakistan, representing the country's organized retail sector, on Saturday, expressed grave concern over the deteriorating environment for tax-compliant retailers due to aggressive revenue enforcement and persistent failures in the FBR-POS integration system. Comprising a large portion of Pakistan's retail and wholesale trade, the organized retail sector directly employs over one million people and supports a wide ecosystem including shopping malls, manufacturers, service providers, and the cottage industry. Retail brands are also a growing contributor to export earnings through physical stores abroad and cross-border e-commerce. Despite being early adopters of the FBR-POS system and generating 25–30% of their turnover in taxes, compliant Tier-1 retailers are now facing a perfect storm of high tax rates, increasingly complex procedures, punitive enforcement, and unresolved system issues. This year alone, several regulatory instruments including SRO 69(I)/2025, SRO 55(I)/2025 and the Tax Laws (Amendment) Ordinance 2025—have exacerbated compliance burdens without addressing critical FBR-POS system deficiencies. These include issues such as (1) POS profile expiry disconnections, rendering invoices unverifiable; (2) Incorrect POS status flags showing 'disconnected' despite active syncing; and (3) Weak support capacity of Pakistan Revenue Automation Limited (PRAL) to address technical challenges. Compounding these technical issues is an increasingly punitive enforcement approach. Several compliant outlets experiencing system errors have been sealed without prior notice, and many retailers report being pressured to pay penalties exceeding Rs500,000 per outlet to reopen, apparently to increase short-term tax collections. Such measures erode business confidence, damage reputations, and undermine long-term documentation efforts. 'We fully support strict action against wilful tax evasion, but the current approach is causing heavy collateral damage,' said Asfandyar Farrukh, Chairperson of CAP. 'Law-abiding retailers are being penalised for compliance, while vast sections of the informal market remain untouched. This is not reform it is a rollback in the making.' The reversal of key incentives has further compounded the crisis. The discontinuation of the 10–15% concessional GST rate for customers of integrated retailers has rendered many businesses uncompetitive vs the untaxed and undertaxed majority, leading to network consolidation and closures. In recent years, this reform vacuum has stalled employment growth, investment, and even export potential. CAP also calls for formal inclusion in policymaking processes to ensure that ongoing and future reforms are informed by on-ground realities. 'Compliant retailers who invested in technology and compliance should be recognized as partners in reform. CAP and its members wholeheartedly support broadening of the retail tax base - but it must be fair, functional, and future-focused,' said Tariq Mehboob Rana, CAP Patron-in-Chief. 'Unless the current issues are urgently addressed, years of progress towards the growth of the documented sector risk being reversed.' Copyright Business Recorder, 2025
