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June 16, 2021

CAP seeks prize scheme to document Tier-1 retailers

 
June 16, 2021

LAHORE: The Chainstore Association of Pakistan (CAP) has welcomed the drive to document non-integrated ‘Tier-1 retailers’ and said a lucrative prize scheme may be effective to persuade them through customers if implemented properly in consultation with the organised retail sector.

CAP Chairman Tariq Mehboob on Tuesday said that the organised retailers were working closely with the Federal Board of Revenue (FBR) and the federal government to document and grow the organised retail sector of the country.

The Finance Bill 2021/22 reflects a positive economic direction but some key concerns remain. Unfortunately, the organised retail sector has still not been given a level-playing field and continues to stagnate for the last two years due to lopsided implementation of POS integration.

Further, the Covid-19 pandemic has created havoc for this sector, and allied businesses, most of all due to which their viability has

been further compromised, he said.

“After bearing the brunt of repeated restrictions, retail businesses needs vital oxygen to survive and cannot wait for the gradual widening of the retail tax base over the next 12 to 24 months. There is still a major gap of over 20 percent on the selling price between integrated and unintegrated retailers.”

Mehboob said that the major reduction in the minimum tax and withholding tax across-the-board for all Tier-1 retailers remained unimplemented, despite the fact that the integrated businesses reports their sales transparently and find it difficult to absorb the high presumptive and indirect tax burden.

“The only game-changing and truly effective solution to achieve the aggressive target of 60,000 integrated POS is a single-digit GST rate for all Tier-1 retailers on all goods and at all stages, ie, import, manufacturing, distribution, wholesale and retail.”

Such a bold step can yield the substantial revenues targetted by Finance Minister Shaukat Tarin and will be crucial in voluntary documentation of the sector based on the last two years’ experience during which only 11,000 POS of around 1,000 retailers were integrated.

However, the association shows reservations on the arrest and prosecution of persons involved in “Concealment of income” announced in the finance bill.

“Although a step in the right direction, major concerns arise regarding its implementation and discretionary powers available to the tax officials. In order to prevent the possible abuse of such powers, there must be a specific approval or adjudication process, otherwise there will be deviation from the envisaged improvement in the environment surrounding taxation,” Mehboob said.