Retailers seek revisions to e-commerce, retail tax measures in Finance Bill 2025-26

#Retailers #seek #revisions #ecommerce #retail #tax #measures #Finance #Bill

LAHORE: The China Store Association of Pakistan (CAP) has expressed serious concern over the lack of meaningful retail tax reform in the Finance Bill 2025-26, warning that many compliance suggestions targeting domestic e-commerce could lead to a rising digital and dimensional economy.

Confirming the government’s goals to expand the tax base and regulate the economy, the CAP believes that contradictory and short -term policy -making has unfairly integrated the retailers with the Federal Board of Revenue Point of Cell (POS) system. It also highlighted the absence of a clear, tax roadmap for three to five years, which is prepared in consultation with stakeholders, which promotes uncertainty in the sector.

“This year, the retail ecosystem expected a strategic, long -term approach in the finance bill,” said Cape Chairperson Asfandyar Farrukh. “Instead, we see the repetition of past methods. Our suggestions have been ignored to support formal retail growth and encourage wider documents.”

Despite its increasing contribution, only 10 % of organized retail retail accounts are Pakistan’s retail and wholesale trade-which is sufficient for 15-20 % shares found in the comparison economies. Cape argues that informal competition, increasing costs of compliance and unbalanced implementation are suppressing the growth of this sector, investment and employment capacity.

Cape’s patron, Chief Tariq Mehboob, noted that last year, the return of GST privileges to retailers’ consumers according to tax last year, leaving the playground in favor of the informal sector. He added that government initiatives like the Tajir Dost Scheme have failed due to poor planning and lack of consultation with key stakeholders. He said, there is still time, before finalizing the finance bill, it has to be revised and revised. Without such action, the country is in danger of wasting another year of real reforms.

To stimulate digital payments and stabilize documents, CAP has proposed a low rate of GST for digital transactions with any retailer, regardless of business size, to the business size. It argues that these rates, which are supported by easy compliance mechanisms and is made on successful provincial level privileges, will help reduce costs, promote formal and remove the economy from cash dependence.

In parallel, CAP has proposed introducing a quarterly advance income tax regime for small retailers. This branch will be paid through banking channels and will be adjusted against annual tax filing. The Association believes that a stable three to five-year tax framework-which will help encourage SME registration and encourage SME registration across the country, combined with positive privileges such as cashback prizes and fast track services in NADRA offices and passport centers.

Referring to the data of the State Bank of Pakistan, the CAP noted that the country’s e -commerce sector is increasing by more than 35 % annually, which has empowered more than 100,000 micro and small sellers, generate jobs in technology and logistics, and more than Rs 53 billion.

The association welcomed progressive measures, such as the introduction of a 5.0 % digital presence on imported goods sold by foreign platforms such as TEMU, as well as implementing the transaction transaction level reporting to improve documents within this sector.

However, the CAP warned that other measures to comply with the tax compliance in the finance bill change these benefits. It already expressed concern over imposing a sales tax stop on the documentary businesses-without allowing the input tax adjustment-the mandatory sales tax registration for the new micro-sellers, which influenced the youth-led and women-led business project. The CAP also criticized the proposed introduction of a complex, multi -rate income tax structure influencing digital platforms, payment service providers and courier companies, and argued that such policies would create operational obstacles, increase payment and complication in China.

In its statement, the CAP called on the Ministry of Finance, the Federal Board of Revenue, and the Ministry of Commerce to stop the implementation of these measures and immediately start consultation with a wide range of stakeholders, especially online sellers, digital platforms and service providers. Of its key recommendations, Cape advised the sellers to restrict 2.0 % sales tax to be presented in an active taxpayer list (ATL). Recognizing income tax registration as small, home -based online sellers complying with; Adopt an easy, single -rate income tax withholding structure at 0.25 %; And the reorganization of the penalty system is in such a way that instead of punishing, it promotes rather than compliance. It recommended to allow provincial -level taxes to be more essential digital services and allow at least two to three months to transfer to the e -commerce business to adjust the proposed rules.