Retailers Get Relief from Tax Integration in Pakistan

Retailers Get Relief from Tax Integration in Pakistan

Karachi, March 23, 2024 – The retail sector in Pakistan is set to receive a significant boost as the Federal Board of Revenue (FBR), the country’s apex tax authority, announced a series of incentives aimed at providing relief to retailers from mandatory online integration with tax authorities.

In a move aimed at easing the burden on retailers, the FBR has introduced changes to the income tax statute, granting exclusions to certain classes of retailers from mandatory online integration requirements.

The newly announced exclusions are set to benefit retailers across various categories, including manufacturer-cum-retailers, wholesaler-cum-retailers, importers-cum-retailers, or individuals engaged in combining retail sales with other business activities.

However, the relief does not extend to retailers falling within specific categories delineated by the FBR. These categories include retailers operating as units of national or international chain stores, those situated in air-conditioned shopping malls, plazas, or centers (excluding kiosks), and retailers whose cumulative electricity bills exceed twelve hundred thousand rupees over twelve consecutive months.

Additionally, wholesalers-cum-retailers engaged in bulk import and supply of consumer goods on both wholesale and retail bases, as well as retailers operating shops measuring one thousand square feet or more, are not eligible for the exemption from mandatory online integration.

This move by the FBR comes as a welcome relief to many retailers who have been grappling with the challenges posed by mandatory online integration requirements. The integration, while aimed at improving tax compliance and transparency, had been seen by many in the retail sector as burdensome and operationally challenging.

The decision to exclude certain classes of retailers from mandatory online integration is expected to alleviate the compliance burden on small and medium-sized retailers, allowing them to focus on business operations and growth without the added administrative complexities.

Commenting on the announcement, industry experts have lauded the FBR’s decision, noting that it will provide a much-needed respite to retailers, particularly those operating in the informal sector or smaller businesses.

“This move by the FBR is a positive step towards supporting the retail sector, which plays a crucial role in Pakistan’s economy,” said Ali Khan, a retail industry analyst. “By granting relief to certain classes of retailers from mandatory online integration, the FBR is not only easing administrative burdens but also fostering a more conducive environment for business growth and investment in the retail sector.”

The FBR’s decision is expected to have far-reaching implications for the retail landscape in Pakistan, with many retailers now poised to benefit from reduced regulatory burdens and greater flexibility in managing their businesses.