Spokesperson FBR heralds retailer sales tax as“Facilitation to Consumers”

Islamabad; 27 July 2022 (Online): As Sindh’s small traders move the court against FPCCI and KCCI for their failure to protect small retailers against the imposition of a fixed retailer’s tax, Spokesperson FBR Asad Tahir heralded the tax regime as a facility that traders could take advantage of.

In a televised appearance, the FBR representative clarified that the fixed tax regime is actually not a new development but has been in effect since 2014, when commercial consumers were split into two categories based on their monthly bills. For monthly bills amounting up to PKR 25,000, a fixed 5% tax was being imposed, while bills exceeding PKR 25,000 were being charged a fixed 7.5% tax. Recent amendments in the Finance Act 2022 had changed the methodology by creating 3 categories of commercial consumers.

As of 1st July 2022, commercial electricity bills up to PKR 30,000 would be levied with a fixed tax of PKR 3,000; a PKR 5,000 tax would be levied on bills between PKR 30,001 and PKR 50,000; bills exceeding PKR 50,000 would have a fixed tax of PKR 10,000.

Probed on the apparent discrimination between commercial consumers in Karachi and Islamabad, where retailers in Karachi were being charged PKR 6,000 at the minimum end, Spokesperson clarified was that there is no discrimination between cities and the fixed tax regime was applicable across Pakistan irrespective of geographic location. The only difference is between filers and non-filers. The aforementioned rates are applicable for small traders and retailers who are on the Active Taxpayers List and have cleared all dues for the years 2020 and 2021. Non-filers would be automatically charged double the amount.

Appealing to the public, Spokesperson shared that “This is a fixed tax applicable every month and the same regime will be in place regardless of geographic location. This is actually a very big facility being offered to small traders and retailers and they should take advantage of it. They should go to their relevant commissioner and clear their prior dues and get on the active taxpayer list to take advantage of the benefit.”

Further clarifying, the FBR spokesperson candidly stated that the organization does not have the capacity to monitor the individual business activity of hundreds of thousands of commercial connections across the country. The fixed tax regime was compared to a monthly line rent or subscription service which is payable even if the service is not used.

Conservative estimates shared by the FBR stated that approximately PKR 42 billion could be recovered on a monthly basis from the implementation of this nationwide tax policy. All transactions on electricity bills after 1st July, 2022 would be taxable under this policy.

Non-compliance with tax obligations and hesitancy to declare assets and paying taxes was a major contributor to the current economic dilemma facing the country. FBR Spokesperson appealed to citizens to enter the tax net and assured them of the FBR’s fullest support, as a strong FBR could be a pillar for a strong Pakistan.