Govt going to clamp down on non-compliant traders

SOHAIL SARFRAZ

ISLAMABAD: Minister of State for Finance Bilal Azhar Kayani said Tuesday that the government would launch an enforcement drive against non-compliant shopkeepers and retailers and impose penalties on those who failed to avail the benefits of the Asaan Tax Scheme.

He informed the National Assembly Standing Committee on Finance that parliamentary support is essential for effective implementation of the scheme. The enforcement plan would be shared with the Prime Minister once finalized.

He admitted that the level of response to the Asaan Tax Scheme was not satisfactory. The level of response was not up to the mark, as we thought. The government has addressed all concerns of the shopkeepers as the scheme was finalized in consultation with the business and trade.

He clarified that the government has decided to initiate enforcement action, including the imposition of penalties, against retailers who have not registered under the Asaan Tax Scheme.

Meanwhile, sources said some amendments would be made to the Asaan Tax Scheme for enforcement against the small shopkeepers. The Federal Board of Revenue (FBR) will implement enforcement against the retailers in a phase-wise manner. The physical mapping of 6,000 retailers has been completed in new markets and new locations. The first target of enforcement would be these 6,000 retailers/small shopkeepers.

The government is equipped with data on 3.7 million retailers.

Out of 3.7 million, the data of CNICs and utility data of 1.4 million small shopkeepers is available with the FBR for the purpose of enforcement. The FBR will go after these 1.4 million retailers under the phase wise manner of enforcement. By June next, the FBR will ensure registration of these retailers at any cost.

As a last resort, the government has the option to enforce harsh enforcement measure of disconnecting ofgas and electricity connections of small shopkeepers and retailers who would persistent remain non-compliant and would not register themselves under the said scheme, sources added.

Briefing the National Assembly Standing Committeeon Finance, chaired by Syed Naveed Qamar,Kayanisaid that the government was now moving towards the enforcement phase after providing retailers with an opportunity to register under the scheme.

He said the government had initially offered retailers the option to register under the normal tax regime, while the Easy Tax Scheme was introduced as an additional simplified mechanism to facilitate their entry into the tax net. Some retailers had registered under the scheme, while those who had not would now face enforcement measures, including penalties.

Kayani said the government had prepared the scheme in consultation with trade representatives and accepted all their demands to facilitate registration. The objective was to encourage retailers to become part of the tax net and fulfil their tax obligations. However, he added that a culture of tax non-compliance had developed in Pakistan, while many retailers feared that registration with the Federal Board of Revenue (FBR) could expose them to unnecessary complications.

He informed the committee that the data of retailers had been obtained through commercial electricity meters of power distribution companies (DISCOs). According to the available data, there were around 3.7 million retailers across the country.

The minister of state said that penalties had also been determined at the time of introducing the Easy Tax Scheme. However, the government would first present its proposed enforcement plan before the committee.

He assured members that the complete mechanism for taking action against unregistered retailers would be shared with them within a few days.

During the discussion, Committee Chairman Syed Naveed Qamar questioned the effectiveness of the scheme, observing that the government had earlier expected around 80 percent of retailers to register under it. He said that if even 20 percent of retailers had not registered, the government would effectively be back to square one.

Qamar also sought details of the proposed enforcement mechanism against non-compliant retailers, asking how the government intended to proceed against those who had failed to register.

Committee member Nafisa Shah recalled that the government had briefed the committee on the Easy Tax Scheme during the budget process. She also raised concerns over the closure of trade through three of Pakistan’s borders and asked the government to explain the implications of these restrictions for the country’s overall trade.

Responding to the discussion on border closures, Kayani said that trade with Afghanistan was currently suspended due to the prevailing situation at the border.

MNA Javed Hanif Khan questioned the rationale for restricting trade on security grounds, arguing that trade continued even between countries having strained political and military relations. He cited China and Taiwan, saying that despite their differences, bilateral trade between the two economies amounted to around USD 300 billion.

He also referred to trade between China and India despite tensions between the two countries, asking why alternative trade models were not being discussed at relevant forums.

Kayani responded that trade and terrorism were two different matters, while Qamar observed that the issue involved national security concerns but also had a genuine economic dimension. The committee chairman remarked that Pakistan’s eastern, western and southern trade routes were facing restrictions, raising concerns about the broader implications for the country’s trade and economic activity.