ISLAMABAD: The Federal Board of Revenue (FBR) is preparing to intensify efforts to document Pakistan’s retail sector by monitoring high-value transactions under a new retailer registration drive aimed at expanding the country’s tax base.
According to sources, the initiative is part of Pakistan’s commitments to the International Monetary Fund (IMF) and is designed to identify retailers conducting substantial business activities without registering with tax authorities or filing income tax returns.
The move follows repeated concerns raised by the IMF over Pakistan’s narrow tax base and persistent revenue shortfalls, which continue to challenge the country’s fiscal targets.
In its latest assessment of Pakistan’s economy, the IMF emphasized the need for comprehensive tax administration reforms and broader documentation of economic activity. The Fund noted that while the FBR has implemented several reforms, greater focus is needed on bringing undocumented businesses into the formal tax system.
As part of its transformation plan, the FBR has already introduced measures such as the Compliance Risk Management (CRM) system to strengthen taxpayer audits, expanded digital invoicing initiatives, and enhanced production monitoring mechanisms to improve tax compliance.
The IMF has also recommended the development of a comprehensive audit policy and audit manual to ensure consistent treatment of taxpayers. Under the proposed framework, audit case selection would be centralized and supported by risk-based monitoring through the CRM system.
However, the Fund observed that many of the current reforms primarily target existing taxpayers rather than expanding the tax net. It urged the government to accelerate retailer registration efforts and introduce enforcement measures focused on undocumented economic activity.
According to the IMF, the FBR should be empowered to restrict certain high-value transactions to individuals and businesses that have filed income tax returns. Such restrictions are expected to encourage unregistered retailers and other non-filers engaged in significant commercial activity to enter the formal tax system.
Pakistan’s retail sector remains one of the largest yet least documented segments of the economy. Despite its substantial contribution to economic activity, successive governments have struggled to increase tax compliance among retailers due to enforcement challenges and resistance from trader groups.
Tax experts believe that combining digital monitoring systems with restrictions on high-value transactions could significantly improve documentation and revenue collection, provided the measures are implemented transparently and fairly.
The retailer registration campaign is expected to become a key component of the government’s fiscal strategy for Budget 2026-27 as authorities seek to boost tax revenues and fulfill commitments under the IMF-supported economic reform programme.
