The Lahore Chamber of Commerce and Industry (LCCI) has shared its observations on the new tax scheme introduced by the government for traders and shopkeepers.
In a bid to provide constructive feedback, the chamber submitted its insights on SRO 420(I)/2024 dated 21st March 2024, expressing hope that their suggestions would be duly considered and integrated into the scheme before its implementation.
Addressing Federal Minister for Finance and Revenue Muhammad Aurangzeb, LCCI President Kashif Anwar emphasized the chamber’s full commitment to supporting the government’s efforts in registering shopkeepers and fostering economic documentation. Anwar highlighted concerns regarding the proposed Tajir Dost Scheme, particularly its imposition of monthly advance tax for all traders and shopkeepers. He noted that such a requirement could burden businesses with administrative complexities and increased costs due to additional legal fees and penalties, particularly for those reliant on lawyers for tax filing. As an alternative, Anwar suggested exploring annual or bi-annual advance tax payments to alleviate these concerns.
Anwar further critiqued the scheme’s proposal to calculate tax based on a trader’s annual rental value, arguing that this method lacked rationality as it bore no correlation to turnover and could potentially tax businesses on unrealized income. Instead, he proposed the collection of advance tax through electricity bills based on actual consumption, a method that could be adjusted in the annual income tax return. Additionally, Anwar advocated for the inclusion of tangible incentives for registered retailers, such as exemptions from audits and reduced tax rates, similar to the Voluntary Tax Compliance Scheme issued by the Federal Board of Revenue (FBR) in 2016.
The LCCI President also called for the introduction of a simplified single-page tax return for retailers and shopkeepers, along with a minimum five-year timeframe for the scheme to ensure policy consistency and continuity. He stressed the importance of incentivizing retailers rather than squeezing compliant taxpayers, suggesting that a simplified Tajir Dost Scheme aligned with LCCI recommendations would encourage more retailers to register and broaden the tax base.
Anwar emphasized the necessity for the FBR to clarify any confusions or ambiguities surrounding the scheme, particularly regarding future tax rates and its applicability to existing or new retailers. He urged for a detailed briefing by the FBR to stakeholders to ensure the success of the scheme.
The LCCI’s submission underscores the importance of collaborative efforts between the government and business stakeholders in formulating tax policies that promote compliance, ease of business, and economic growth. With careful consideration of these recommendations, the Tajir Dost Scheme has the potential to effectively register traders and shopkeepers while fostering a conducive business environment in Pakistan.
