The Federal Board of Revenue (FBR) has launched a major campaign to bring around 3.5 million small traders and shopkeepers into Pakistan’s formal tax system through a simplified taxation scheme.
The initiative is aimed at encouraging small businesses to register with tax authorities by reducing paperwork and easing compliance requirements.
Under the new arrangement, eligible traders will be able to complete registration through a one-page form, which will be available in Urdu and regional languages.
The government hopes the simplified process will encourage a large number of previously undocumented small businesses to become part of the formal economy.
1% Tax Proposed for Eligible Traders
According to an FBR notification, shopkeepers with annual turnover of up to Rs200 million will be subject to a simplified tax rate of 1% under the scheme.
The initiative also establishes a minimum tax liability of Rs25,000 for eligible shopkeepers.
The simplified treatment is intended to distinguish smaller businesses from larger commercial enterprises that face more extensive tax reporting and compliance obligations.
By offering a relatively straightforward tax structure, the FBR aims to make registration more accessible to traders who may otherwise find the existing taxation system complicated.
Traders to Receive Compliance Relief
One of the key features of the scheme is the reduction in compliance requirements for registered shopkeepers.
The FBR has said traders registered under the initiative will be exempt from point-of-sale (POS) and digital invoicing requirements.
They will also be exempt from tax audits under the scheme and will not be required to act as withholding agents.
These exemptions are intended to reduce the administrative burden on small businesses and make participation in the formal tax system more attractive.
FBR Officials Barred From Shop Inspections
The scheme also provides registered traders with protection from routine inspections by tax officials.
According to the FBR, tax officials will not be permitted to inspect shopkeepers registered under the special scheme.
The measure is expected to provide additional reassurance to traders who may have concerns about joining the formal tax system.
The government is attempting to create a system in which registration is accompanied by simpler compliance obligations rather than the extensive administrative requirements generally associated with larger businesses.
Registration Available Through Multiple Channels
Small traders will have several options for registering under the scheme.
According to the FBR, registration will be available through the FBR website, mobile application and designated tax offices.
The availability of multiple registration channels is intended to make the process easier for shopkeepers across the country.
Traders who may not be comfortable with online registration will also be able to approach designated tax offices for assistance.
The use of a one-page registration form is another key part of the government’s effort to simplify the process.
Green QR-Code Plates for Registered Shops
Registered businesses will also receive a visible identification mechanism.
A green plate carrying a QR code will be displayed at shops that comply with the scheme.
The QR code-based identification system is intended to help distinguish registered businesses and provide a simple way of identifying traders who have entered the formal tax system.
The measure could also help authorities maintain a clearer record of businesses participating in the initiative.
Government Seeks to Expand Tax Base
The FBR’s campaign comes as the government seeks to broaden Pakistan’s tax base by bringing more businesses and individuals into the formal economy.
Small traders and shopkeepers represent a large segment of commercial activity across the country, making their inclusion potentially important for increasing tax registration.
However, encouraging voluntary participation has historically been a challenge when businesses face complicated procedures or fear additional compliance obligations.
The new scheme attempts to address those concerns by combining simplified registration with exemptions from several requirements.
Focus on Small Businesses
The scheme is specifically designed to make taxation easier for smaller businesses rather than applying the same procedures used for larger companies.
A one-page form, multilingual registration and simplified tax treatment could make it easier for shopkeepers to understand their obligations.
At the same time, the proposed 1% tax rate and Rs25,000 minimum liability provide eligible traders with a relatively clear framework for meeting their tax responsibilities.
The FBR hopes these measures will encourage traders who operate outside the formal tax system to register without facing the administrative burden associated with more complicated tax regimes.
3.5 Million Traders Targeted
The government has set an ambitious target of bringing around 3.5 million small traders and shopkeepers into the tax net.
The success of the initiative will depend largely on how effectively the simplified registration system is implemented and whether traders view the benefits as sufficient to encourage formal registration.
The FBR’s decision to provide exemptions from audits, digital invoicing, POS requirements and withholding responsibilities is designed to make the scheme more attractive.
With registration available online, through a mobile application and at designated tax offices, authorities are now seeking to reach traders across different parts of the country.
If successfully implemented, the initiative could significantly expand the number of registered small businesses and strengthen Pakistan’s formal tax base.
For now, traders interested in participating can use the registration channels announced by the FBR and review the eligibility requirements before registering under the new scheme.
Also read: FBR Extends Anti-Smuggling Powers Until June 2027
