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Business Recorder
12-06-2025
- Business
- Business Recorder
Retail sector woes prompt tax on digital platforms: FBR
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial Wednesday said tax has been imposed on digital platforms after serious concerns of formal retail sector paying sales tax as well as income tax on sales of goods. During post-budget press conference held on Wednesday, the FBR chairman clarified that 2.5 per cent tax would be applicable on income slab between Rs600,000 and Rs1.2 million under revised salary slabs. The tax rate of one per cent has been mentioned in the Finance Bill 2025-26. Taxing the digital frontier: Pakistan's bold move to tap e-commerce and online revenues Over Rs100 billion worth digital invoicing sales have been reported to the FBR. Sales through digital invoicing needs strong deterrence under self-assessment scheme. The integration of sales tax registered persons has been started through authorised integrators including Pakistan Revenue Automation Limited (PRAL). The FBR chairman stated that the country is moving towards digital economy. Formal retail sector is paying all kinds of taxes as compared to undocumented online companies engaged in selling of goods and paying no taxes. All Pakistan Retail Association has complaint to the FBR that the market of the documented sector has been at the verge of collapse due to informal sector. They are at a disadvantage of paying 18 per cent sales tax as compared to informal sector. The level playing field has been restored through the Finance Bill. Two percent tax of gross value of supplies would be applicable on persons supplying digitally ordered goods from within Pakistan through online market place, website and software applications. The FBR chairman stated that the board has included all taxable activities to incorporate digitally ordered taxable goods into the e-commerce sales tax framework. Presently, online marketplaces are required to withhold one percent sales tax on local supplies made by non-active taxpayer vendors. However, this does not fully capture the growing e-commerce sector, especially businesses using websites, apps, etc, for online sales to consumers. To address this, the withholding tax scope has been expanded to cover transactions settled via online payment or CoD. Under the proposed regime, payment intermediaries (banks, financial institutions, exchange companies, and payment gateways) will collect sales tax on digital payments, while couriers will handle tax collection for CoD transactions. Additionally, the withholding tax rate is set to increase from one per cent to two per cent. Under the Finance Bill 2025, in the case of supply of digitally ordered goods by online market place, website and software application from within Pakistan during the course of e-commerce, the liability tocollect and pay tax shall be of payment intermediary including a banking company, a financial institution, licensed exchange company or payment gateway in case the payment is made digitally and of the courier delivering the goods where those are supplied on Cash on Delivery (CoD) basis at the rates provided in the Eleventh Schedule. The FBR chairman also stated that sales tax has been imposed on the import of solar panels to create an enabling environment for domestic manufacturing industry. The FBR Member Inland Revenue (Policy) stated that domestic e-commerce covers a number of e-stores operating outside the formal banking system. They sell goods through Bykea and websites. The FBR has chalked out a domestic e-commerce framework for small and medium businesses selling goods through websites or online. A simple regime has been introduced for payment of tax through couriers and banks with final discharge of tax liability. The FBR Member said that four items have been included in the Third Schedule of the Sales Tax Act to check under-invoicing on the import of chocolates, pet food and imported cereal bars in retail packing. The FBR chairman stated that the non-profit organisations would go through strict scrutiny under the Finance Bill 2025-26. The FBR has laid down very strict conditions for the NPOs for availing exemption. Now the NPOs have to prove that they are not engaged in commercial activities. In future, we would review performance and scrutinise NPOs. Pointing out that globally non-profit organisations were not subjected to tax measures, Langrial said, 'No organisation will be exempt from scrutiny in the future.' Under the Finance Bill 2025-26, the FBR has listed entities granted complete exemption on any income and exemption subject to Section 100C provision respectively have been merged. Now all entities require approval under Section 100C to be declared as non-profit organisation and availing exemption against income. Copyright Business Recorder, 2025
Business Recorder
03-06-2025
- Business
- Business Recorder
FBR reforms: PM Shehbaz orders 3rd-party validation
ISLAMABAD: Prime Minister Shehbaz Sharif on Monday directed the authorities to enlist internationally recognised firms to conduct third-party validation of reforms under way in the Federal Board of Revenue (FBR), as part of broader efforts to combat corruption and improve institutional transparency. The prime minister, while chairing a high-level review meeting on FBR's performance, said that the government is committed to transforming Pakistan into a stable global economy through sustained institutional reforms. Sharif linked the reform drive to what he described as a 'historic' victory in the recent military conflict with India, stating that 'Pakistan must now channel its national momentum into economic rebuilding.' Faceless customs assessment system: PM orders countrywide enforcement 'After our historic victory, it's time to show the same resolve in rebuilding and reforming,' he said. 'We are determined to turn Pakistan into a stable global economy.' He said institutional reforms were being implemented rapidly across sectors, with a particular focus on eliminating corruption and improving transparency in governance. He expressed satisfaction with recent progress in the FBR, particularly highlighting the performance of the newly introduced Faceless Customs Assessment (FCA) system. The FBR officials briefed the PM that the FCA system – designed to reduce human discretion in customs clearance – had resulted in a rise in revenue and a reduction in clearance times. He was also informed about ongoing reforms at Pakistan Revenue Automation Limited (PRAL), which is leading the digitisation of tax services. It was briefed that a simplified digital tax return system is expected to be launched soon, with interfaces available in Urdu and other local languages to improve accessibility for taxpayers. Expressing satisfaction with the ongoing reforms at FBR, Sharif said the engagement of global auditing firms would help validate the reform process and ensure credibility and transparency. He reaffirmed the government's commitment to economic stability and reform. 'Insha'Allah, we will succeed in making Pakistan economically stable,' he said. The meeting was attended by Law Minister Azam Nazeer Tarar, Information Minister Attaullah Tarar, the chairman of the FBR Rashid Mahmood Langrial, and senior officials from relevant departments. Copyright Business Recorder, 2025
Business Recorder
03-06-2025
- Business
- Business Recorder
FBR reforms: PM orders 3rd-party validation
ISLAMABAD: Prime Minister Shehbaz Sharif on Monday directed the authorities to enlist internationally recognised firms to conduct third-party validation of reforms under way in the Federal Board of Revenue (FBR), as part of broader efforts to combat corruption and improve institutional transparency. The prime minister, while chairing a high-level review meeting on FBR's performance, said that the government is committed to transforming Pakistan into a stable global economy through sustained institutional reforms. Sharif linked the reform drive to what he described as a 'historic' victory in the recent military conflict with India, stating that 'Pakistan must now channel its national momentum into economic rebuilding.' Faceless customs assessment system: PM orders countrywide enforcement 'After our historic victory, it's time to show the same resolve in rebuilding and reforming,' he said. 'We are determined to turn Pakistan into a stable global economy.' He said institutional reforms were being implemented rapidly across sectors, with a particular focus on eliminating corruption and improving transparency in governance. He expressed satisfaction with recent progress in the FBR, particularly highlighting the performance of the newly introduced Faceless Customs Assessment (FCA) system. The FBR officials briefed the PM that the FCA system – designed to reduce human discretion in customs clearance – had resulted in a rise in revenue and a reduction in clearance times. He was also informed about ongoing reforms at Pakistan Revenue Automation Limited (PRAL), which is leading the digitisation of tax services. It was briefed that a simplified digital tax return system is expected to be launched soon, with interfaces available in Urdu and other local languages to improve accessibility for taxpayers. Expressing satisfaction with the ongoing reforms at FBR, Sharif said the engagement of global auditing firms would help validate the reform process and ensure credibility and transparency. He reaffirmed the government's commitment to economic stability and reform. 'Insha'Allah, we will succeed in making Pakistan economically stable,' he said. The meeting was attended by Law Minister Azam Nazeer Tarar, Information Minister Attaullah Tarar, the chairman of the FBR Rashid Mahmood Langrial, and senior officials from relevant departments. Copyright Business Recorder, 2025
Express Tribune
02-06-2025
- Business
- Express Tribune
Govt working tirelessly to eliminate corruption and lack of transparency: PM
Listen to article Prime Minister Shehbaz Sharif said Monday that institutional reforms are progressing rapidly across all sectors, as part of a broader effort to eliminate corruption and address persistent gaps in transparency. 'All government institutions are working tirelessly to eliminate corruption and other deficiencies, such as lack of transparency,' Shehbaz said while chairing a high-level meeting on Federal Board of Revenue (FBR) reforms in Islamabad. READ MORE: PM purges FBR of corrupt officials The prime minister directed officials to engage internationally recognised audit firms for third-party validation of reforms underway within the FBR to ensure credibility and external accountability. Shehbaz also reviewed the performance of the Faceless Customs Assessment System, a key initiative launched to minimise human interference in customs processes. He expressed satisfaction, noting that the system had improved revenue collection and significantly reduced clearance times. READ MORE: Rs600m corruption unearthed in Dasu project He reaffirmed that the government's reform agenda, bolstered by recent economic indicators, is evidence that the country is moving in the right direction. Officials at the meeting briefed the prime minister on the Pakistan Revenue Automation Limited (PRAL) reforms, and announced that a simplified digital tax return system would soon be introduced, including features in Urdu and other local languages to assist the general public. The meeting was attended by Minister for Law and Justice Azam Nazeer Tarar, Minister for Information and Broadcasting Attaullah Tarar, the FBR Chairman, and other senior officials. READ MORE: Tax shortfall exceeds Rs1 trillion Previously, Prime Minister Shehbaz had directed the urgent and effective implementation of ongoing reforms within the FBR, placing particular emphasis on the digitisation and automation of the country's tax system. In a meeting Shehbaz called for decisive action to rectify what he described as '70 years of mismanagement' in Pakistan's tax infrastructure. He reiterated that while honest taxpayers and businesses would be fully supported, those involved in evasion would face firm legal consequences without exceptions. Shehbaz also commended the FBR and its enforcement arms for their recent efforts in improving tax revenue, following the rollout of systems such as the Faceless Customs Assessment System.
Business Recorder
18-05-2025
- Business
- Business Recorder
Failures in POS integration system: Chainstore Association concerned at deteriorating environment for tax-compliant retailers
LAHORE: The Chainstore Association of Pakistan, representing the country's organized retail sector, on Saturday, expressed grave concern over the deteriorating environment for tax-compliant retailers due to aggressive revenue enforcement and persistent failures in the FBR-POS integration system. Comprising a large portion of Pakistan's retail and wholesale trade, the organized retail sector directly employs over one million people and supports a wide ecosystem including shopping malls, manufacturers, service providers, and the cottage industry. Retail brands are also a growing contributor to export earnings through physical stores abroad and cross-border e-commerce. Despite being early adopters of the FBR-POS system and generating 25–30% of their turnover in taxes, compliant Tier-1 retailers are now facing a perfect storm of high tax rates, increasingly complex procedures, punitive enforcement, and unresolved system issues. This year alone, several regulatory instruments including SRO 69(I)/2025, SRO 55(I)/2025 and the Tax Laws (Amendment) Ordinance 2025—have exacerbated compliance burdens without addressing critical FBR-POS system deficiencies. These include issues such as (1) POS profile expiry disconnections, rendering invoices unverifiable; (2) Incorrect POS status flags showing 'disconnected' despite active syncing; and (3) Weak support capacity of Pakistan Revenue Automation Limited (PRAL) to address technical challenges. Compounding these technical issues is an increasingly punitive enforcement approach. Several compliant outlets experiencing system errors have been sealed without prior notice, and many retailers report being pressured to pay penalties exceeding Rs500,000 per outlet to reopen, apparently to increase short-term tax collections. Such measures erode business confidence, damage reputations, and undermine long-term documentation efforts. 'We fully support strict action against wilful tax evasion, but the current approach is causing heavy collateral damage,' said Asfandyar Farrukh, Chairperson of CAP. 'Law-abiding retailers are being penalised for compliance, while vast sections of the informal market remain untouched. This is not reform it is a rollback in the making.' The reversal of key incentives has further compounded the crisis. The discontinuation of the 10–15% concessional GST rate for customers of integrated retailers has rendered many businesses uncompetitive vs the untaxed and undertaxed majority, leading to network consolidation and closures. In recent years, this reform vacuum has stalled employment growth, investment, and even export potential. CAP also calls for formal inclusion in policymaking processes to ensure that ongoing and future reforms are informed by on-ground realities. 'Compliant retailers who invested in technology and compliance should be recognized as partners in reform. CAP and its members wholeheartedly support broadening of the retail tax base - but it must be fair, functional, and future-focused,' said Tariq Mehboob Rana, CAP Patron-in-Chief. 'Unless the current issues are urgently addressed, years of progress towards the growth of the documented sector risk being reversed.' Copyright Business Recorder, 2025
