ISLAMABAD: The federal government is set to launch a new fixed tax scheme from July 1, 2026, targeting around 100,000 small shopkeepers and retailers in the first phase as part of efforts to expand Pakistan’s tax base.
Senior Federal Board of Revenue (FBR) official Dr. Hamid Ateeq Sarwar informed the National Assembly Standing Committee on Finance on Monday that participating retailers would pay a fixed annual tax of Rs. 25,000 to benefit from the scheme.
According to the FBR, the initiative is aimed at encouraging millions of small businesses to join the formal tax system while reducing compliance burdens and minimizing direct interaction with tax officials.
Dr. Sarwar said the government intends to persuade nearly 3.5 million small shopkeepers across the country to consider joining the scheme. Initially, however, the focus will remain on enrolling approximately 100,000 retailers.
“We will initially target around 100,000 retailers for contributing at least Rs. 25,000 to avail the scheme,” he told the committee.
No Routine Audits for Registered Retailers
A key feature of the proposed scheme is protection from routine tax audits. Dr. Sarwar explained that retailers registered under the fixed tax regime would generally not be subject to audits unless authorities identify major discrepancies between declared income and visible assets.
He noted that investigations could be triggered in cases where a retailer owns high-value assets, such as luxury vehicles or expensive properties, that appear inconsistent with declared business activity.
FBR to Issue Identification Number Plates
Under the scheme, participating retailers will be assigned a unique identification number plate by the FBR. Once registered, tax officials in field formations will not be allowed to conduct visits or raids at those shops without valid grounds.
The measure is intended to increase confidence among small business owners and encourage voluntary tax compliance.
Government Eyes Wider Tax Base
The government views the fixed tax scheme as an important step toward documenting the retail sector, which remains one of the largest untaxed segments of the economy.
Officials hope that the simplified tax structure will attract a significant number of small businesses into the formal economy and help improve tax collection without increasing compliance costs.
Super Tax to Generate Rs. 400 Billion
During the committee meeting, Dr. Sarwar also highlighted the impact of the super tax on high-income earners. He stated that taxpayers with incomes exceeding Rs. 500 million are expected to contribute significantly, with the measure projected to generate approximately Rs. 400 billion in revenue.
The fixed tax scheme is scheduled to take effect from July 1, 2026, subject to the approval and implementation of the relevant budgetary measures.
