Pakistan launched a new fixed-tax scheme and a turnover tax on June 5, 2026, to simplify compliance for small business owners [2, 3].
This initiative seeks to broaden the national tax base and generate additional revenue to address the country's ongoing economic challenges. By reducing the complexity of filing, the government aims to encourage small traders, particularly those in commercial hubs like Karachi, to enter the formal tax net [1, 2].
The new measures include a 1% turnover tax [1]. Additionally, the government introduced a fixed-tax scheme for traders whose annual turnover does not exceed Rs 200 million [1].
The President of the All Pakistan Traders Association, acting as a spokesperson for small business owners, said the scheme will succeed. The association views the move as a way to alleviate the administrative burden on small-scale merchants who previously struggled with complex tax codes [1, 2].
Government officials said the primary goal is to integrate a larger portion of the informal economy into the regulated system. The simplified structure is designed to make compliance less daunting for those with lower annual revenues, allowing the state to capture more consistent revenue streams [1, 2].
While some reports focus on the fixed-tax elements, others highlight the specific 1% turnover rate as a key incentive for participation [1, 2]. The rollout comes as part of a broader strategy to stabilize the economy through more inclusive fiscal policies [2].
“The government introduced a 1% turnover tax and fixed-tax options for businesses with annual sales up to Rs 200 million.”
This policy represents a shift toward 'presumptive' or simplified taxation to combat chronic tax evasion in Pakistan's massive informal sector. By lowering the barrier to entry for businesses earning up to Rs 200 million, the government is prioritizing volume of taxpayers over high individual rates to create a more stable and predictable revenue stream.
