Subtitle: Updated sales tax rules set out Tier-1 criteria based on retail chains, shopping centres, electricity bills and turnover thresholds.
ISLAMABAD: The Federal Board of Revenue (FBR) has updated the definition of a Tier-1 retailer for Tax Year 2027, setting out the categories of retailers that fall within the classification under Pakistan’s sales tax framework.
The FBR issued the Sales Tax Act, 1990, updated up to June 30, 2026, which specifies the criteria for determining whether a retailer is classified as Tier-1.
Under the updated definition, a retailer will be treated as a Tier-1 retailer if it falls into any one or more of the specified categories.
National and international retail chains
A retailer operating as a unit of a national or international chain of stores falls within the Tier-1 category.
The criterion applies to retailers that form part of an established chain operating at national or international level.
Retailers in air-conditioned shopping centres
The definition also covers retailers operating in an air-conditioned shopping mall, plaza or centre.
However, kiosks operating within such shopping malls, plazas or centres are specifically excluded from this category.
Electricity consumption threshold
A retailer whose cumulative electricity bill during the immediately preceding 12 consecutive months exceeds Rs1.2 million is also classified as a Tier-1 retailer.
The electricity consumption threshold provides a separate basis for determining whether a retailer falls within the Tier-1 category.
Wholesaler-cum-retailers
A wholesaler-cum-retailer with turnover exceeding Rs200 million is covered where the business is engaged in bulk imports and supplies consumer goods on a wholesale basis to retailers as well as on a retail basis to the general public.
This criterion therefore applies to businesses combining wholesale and retail operations where the specified turnover threshold is exceeded.
Retailers with turnover above Rs200 million
The updated definition also covers retailers whose turnover exceeds Rs200 million.
The turnover may be established either through the retailer’s declaration or through the worked-back value of turnover determined from tax deductions under Sections 236G or 236H of the Income Tax Ordinance, 2001, during the immediately preceding 12 consecutive months.
Other categories prescribed by FBR
The definition further empowers the FBR to classify any other person or class of persons as Tier-1 retailers through the prescribed mechanism.
At the same time, the FBR may exclude any person or class of persons from the Tier-1 category through a notification published in the official gazette.
The updated definition provides the basis for determining which retailers fall under the Tier-1 category for sales tax purposes in Tax Year 2027.
The criteria cover a range of factors, including membership of national or international retail chains, operation in air-conditioned shopping centres, electricity consumption, turnover and specific wholesale-retail business activities.