Karachi, February 28, 2025 – The business community has strongly advocated for a fixed tax regime for traders following the failure of the Tajir Dost Scheme (TDS) to yield the desired results.
This demand has gained momentum as the traders seek a simplified taxation system to ensure ease of doing business.
In this context, the Pakistan Business Forum (PBF), in its recommendations for the 2025-26 budget, has urged the government to introduce a fixed tax regime for traders. The organization emphasized that the Tajir Dost Scheme did not bring the anticipated tax revenue and failed to encourage voluntary compliance among traders.
Ahmad Jawad, Chief Organizer of the PBF, has proposed a monthly fixed tax of Rs 20,000 for large retailers, Rs 10,000 for small retailers, and Rs 5,000 for traders operating in villages and smaller towns. He suggested that tax collection should be integrated with electricity bills, ensuring that once the traders pay their dues, they are not subjected to further tax inquiries.
The PBF has asserted that if Pakistan’s economy is to stabilize, the fixed tax system for traders should be implemented without any external pressure. Jawad pointed out that while the government has historically been lenient towards traders, it must now take a firm stance on tax collection to enhance national revenue. He stressed that the wholesale and retail trade sector contributes 18.1% to GDP but accounts for only 2% of direct tax revenue. In contrast, the industrial sector, which comprises 18.4% of GDP, contributes a significant 40% to tax revenues.
To achieve economic stability, Jawad suggested that Pakistan’s annual tax collection should be increased to at least 15 trillion rupees. He emphasized that the Federal Board of Revenue (FBR) should work on expanding the tax net rather than overburdening existing taxpayers. A fair, transparent, and business-friendly tax system is essential for increasing compliance.
Furthermore, he highlighted that Pakistan’s tax-to-GDP ratio currently stands at 9%, significantly lower than the 16-18% achieved by regional countries. Instead of imposing taxes on traders based on turnover, a fixed tax system should be implemented to prevent resistance to tax registration and avoid disruptions to established business operations.
It is worth noting that successive governments in Pakistan have repeatedly struggled to bring traders into the formal tax net. Despite various attempts, voluntary tax compliance in the trading sector remains a persistent challenge.
