Pakistan's Federal Board of Revenue (FBR) has released a draft "Fixed Tax Asaan" scheme to levy a turnover tax on small traders [1].
The proposal represents a critical effort by the government to broaden the national tax net and increase revenue after previous attempts to simplify compliance failed. By targeting the small-retail sector, the state hopes to bring thousands of informal businesses into the formal economy.
Under the draft plan, small traders and shopkeepers with annual sales up to Rs200 million [1] would be subject to a 1% turnover tax [1]. The scheme is designed to minimize the administrative burden on business owners by utilizing a one-page tax return [1].
To encourage adoption, the FBR is offering significant incentives. Eligible traders would receive exemptions from tax audits and would not be required to report digital transactions [1]. These measures aim to reduce the friction associated with tax filing for those who lack complex accounting systems.
The government said it announced the initiative on June 5 [2]. The FBR is currently seeking feedback on the draft before finalizing the regime. This move follows the failure of the earlier Tajir Dost scheme to effectively expand the tax base [3].
Officials said the "Fixed Tax Asaan" scheme could generate approximately Rs50 billion in annual revenue [4]. The focus on a fixed percentage of turnover is intended to provide predictability for both the shopkeeper and the treasury.
The shift toward a simplified regime comes as Islamabad seeks more sustainable domestic funding sources to manage its fiscal obligations [3].
“The FBR aims to raise Rs50 billion annually through a simplified 1% turnover tax.”
This policy shift indicates a transition from complex income-based taxation to a simpler turnover-based model for the retail sector. By offering audit exemptions and a streamlined filing process, the Pakistani government is attempting to trade a lower tax rate for higher compliance volume. If successful, this could significantly reduce the shadow economy, though its effectiveness depends on whether small traders perceive the 1% rate as fair compared to the benefit of avoiding audits.
