In response to the International Monetary Fund’s (IMF) call for increased tax revenue and economic documentation, the Federal Board of Revenue (FBR) has formulated a comprehensive scheme aimed at bringing more traders into the tax net.
Under the direction of the new government, the FBR has outlined a plan to register approximately 350,000 traders, with the initial focus on five major cities: Islamabad, Lahore, Peshawar, Quetta, and Karachi.
Sources within the FBR revealed that one key aspect of the scheme involves collecting taxes from traders through their electricity bills on a monthly basis. This would involve distributing their income over 12 months, with a new column dedicated to traders on electricity bills.
Interestingly, the proposed plan suggests collecting taxes from the current electricity consumer operating the business at a shop, rather than from the shop's actual owner.
While awaiting approval from the new coalition government, the FBR aims to present the proposed scheme before the budget of the upcoming financial year. It is expected that implementing the scheme will result in a substantial increase in annual revenue, estimated at a minimum of Rs 400 billion, and contribute to the formalization of the economy.
Despite the retail and wholesale sector accounting for 18 percent of the country's economy, taxes collected from this sector remain below five percent, indicating the significance of bringing more traders into the tax net for economic growth and stability.
