The Federal Board of Revenue’s (FBR) much-hyped Tajir Dost Scheme — an initiative designed to bring retailers and traders into the formal tax net — has officially ended in failure, according to the latest International Monetary Fund (IMF) country report on Pakistan, released on May 17, 2025.
Launched in April 2024, the Tajir Dost Scheme (or Trader Friend Scheme) was the FBR’s most ambitious effort to register small businesses, retailers, and traders by offering simplified registration processes and fixed monthly tax liabilities. It aimed to build trust between the tax authority and the business community by positioning the FBR as a “dost” or friend to the tajir class. However, the scheme failed to generate the expected results.
“The indicative target on tax revenues from retailers under the Tajir Dost Scheme was discontinued at the time of the First Review,” the IMF report noted. It has now been replaced with a new focus: monitoring income tax revenues from retailers through alternative means. Despite the failure of this scheme, the FBR has seen modest success in collecting withholding taxes from unregistered businesses, which led to a 51% year-on-year increase in tax filers among tajirs, wholesalers, and retailers. Furthermore, there was a 38% rise in filers with positive tax liabilities as of January 2025.
This partial success led the IMF to introduce a revised target focused on income tax revenue rather than depending solely on a scheme like the Tajir Dost. While the IMF approved the formal scrapping of the Tajir Dost Scheme, it imposed new conditions on the FBR. The revenue body is now required to submit monthly progress reports detailing the number of registered retailers, the value of tax returns filed by newly registered taxpayers, and the total revenue collected.
Ultimately, the end of the Tajir Dost Scheme reflects longstanding challenges in formalizing Pakistan’s vast informal economy. While the FBR’s reliance on indirect methods like withholding taxes shows some promise, the failure of yet another retailer-focused scheme highlights the need for a more comprehensive and trust-based approach to engaging the tajir community in Pakistan.