Fixed tax scheme for shopkeepers a major step towards broadening tax base: SM Tanveer

Patron-in-Chief of the United Business Group (UBG), SM Tanveer, has welcomed the government's newly introduced fixed tax scheme for shopkeepers and small traders

LAHORE: Patron-in-Chief of the United Business Group (UBG), SM Tanveer, has welcomed the government’s newly introduced fixed tax scheme for shopkeepers and small traders, describing it as a constructive and forward-looking measure that could significantly strengthen Pakistan’s taxation system while encouraging greater documentation of the economy.

In a statement, Tanveer praised the efforts of Federal Finance Minister Muhammad Aurangzeb and Minister of State for Finance and Revenue Bilal Azhar Kiyani for introducing what he called a landmark reform aimed at expanding the country’s tax net through a simplified and business-friendly framework.

He said the initiative was the result of extensive consultations between the government and representatives of the business community, adding that the concerns and recommendations of traders had been carefully considered during the policy-making process.

According to Tanveer, the scheme marks an important milestone in the government’s efforts to bring more businesses into the formal tax system without placing an excessive burden on small-scale traders. He noted that broadening the tax base remains essential for improving revenue collection and reducing reliance on a limited number of taxpayers.

Under the newly announced mechanism, shopkeepers and small traders with annual sales of up to Rs20 million will be subject to a fixed income tax rate of one percent. The government believes the simplified structure will make tax compliance easier, reduce administrative complications, and provide greater certainty for small businesses regarding their tax obligations.

Tanveer said the fixed tax model would encourage voluntary participation in the tax system by offering a clear and transparent framework for traders who have traditionally remained outside the documented economy. He added that such measures can help create a more equitable taxation environment while supporting economic growth.

The UBG chief also welcomed the decision to allow traders to claim deductions on withholding taxes, describing it as a relief measure that would help reduce financial pressures on small and medium-sized businesses. He said the provision demonstrates the government’s willingness to address practical challenges faced by the trading community.

Highlighting the role of business representatives in shaping the policy, Tanveer congratulated trader leader Ajmal Baloch for his efforts during negotiations with the government. He said the successful dialogue between policymakers and trader organisations had paved the way for a mutually beneficial solution.

Business leaders have generally viewed the scheme as a positive development, arguing that a simplified tax structure can improve compliance, enhance documentation, and strengthen confidence between taxpayers and revenue authorities. Observers believe the success of the initiative will depend on its effective implementation and the government’s continued engagement with stakeholders across the country.