LAHORE: The business community has called on the government to withdraw the fixed tax component from the newly proposed trader taxation scheme, arguing that the measure would disproportionately impact small retailers while undermining efforts to encourage voluntary documentation of the economy.
Speaking on the proposed scheme, Naeem Mir, Chairman of the Supreme Council All Pakistan Anjuman-e-Tajiran, urged the government to reconsider the annual fixed tax of Rs25,000 imposed on micro-scale traders under the Finance Bill 2026.
Small Traders Bearing the Burden
According to Mir, the scheme’s current structure effectively targets only the smallest traders because several major business categories have already been excluded from its scope.
He noted that distributors, wholesalers, importers, exporters, brands, processors, jewelers, and other medium-sized business entities are not covered by the proposed regime, leaving micro-scale traders as the primary taxpayers under the scheme.
Mir argued that this approach places an unfair burden on businesses with limited turnover and financial capacity.
Traders Support Documentation Drive
Despite reservations about the fixed tax component, the trader leader welcomed the government’s efforts to simplify tax compliance and expand economic documentation.
He praised the introduction of a simplified tax return form and emphasized that traders across Pakistan support registration with the Federal Board of Revenue (FBR).
According to Mir, the business community has no objection to becoming part of the documented economy, provided the process remains simple, transparent, and fair.
Proposal for Registration Before Taxation
The traders’ representative suggested that the government should initially focus on registering commercial units and integrating them into the FBR’s digital system rather than imposing a fixed tax immediately.
Under his proposal, all businesses should be brought into the tax database through a simplified registration and return filing process. The information collected could then be analyzed using the FBR’s digital infrastructure to identify traders who understate their business activity or conceal taxable income.
Those found evading taxes should subsequently be issued notices and brought into the formal tax net through legal proceedings.
Concerns Over Market-Level Enforcement
Mir also expressed concerns over reports that tax officials could be deployed in markets and commercial centers to monitor compliance through QR codes, plaques, and direct collection measures.
He argued that such enforcement methods are inconsistent with the government’s stated objective of creating a faceless and fully digital tax administration system.
According to him, physical interaction between traders and tax officials should be minimized in line with the government’s broader digitalization agenda.
Call for Revision of the Scheme
The trader leader expressed hope that the Finance Minister would review concerns raised by the business community and amend the proposed scheme before its implementation.
He maintained that a registration-focused approach would be more acceptable to traders and more effective in achieving the government’s objective of documenting the economy.
Business associations believe that removing the fixed tax requirement while prioritizing digital registration could encourage wider participation from small retailers and improve tax compliance without placing additional financial pressure on low-income traders.
The proposed trader taxation scheme is currently under discussion as part of the Finance Bill 2026 and may be subject to further amendments before its final approval by Parliament.
