The Federal Board of Revenue (FBR) of Pakistan is launching a unique initiative – “Tajir Doost,” a mobile app designed to document and bring into the tax net 3.2 million retailers and shopkeepers across the country. This marks a significant step towards expanding the taxpayer base and boosting government revenue.
Key Features of the “Tajir Doost” App:
- Simplified Registration: Retailers simply need to submit basic information like shop size and electricity meter number through the app to register with the FBR.
- Tax Incentives: To encourage adoption, the FBR offers a 50% tax reduction for voluntary registrations under the scheme.
- Valuation-Based Taxation: Instead of complex income calculations, FBR’s property and shop rental valuations will determine tax liability.
- Door-to-Door Campaigns: In four provincial capitals and Islamabad, the FBR plans targeted campaigns to identify and register non-filing retailers.
- Data Cross-checking: Electricity meter data will be used to verify income claims and identify potential tax evasion cases.
- Random Audits: To uphold accuracy, the FBR will conduct random audits to ensure correct valuations and tax payments.
- Transparency and Minimized Discretion: The scheme aims to minimize discretionary power in valuation and assessment, protecting potential revenue.
- Offsetting System: Monthly advance tax payments made through the app will be adjusted against final income tax due at year-end, eliminating double taxation.
Potential Benefits:
- Increased Tax Revenue: Bringing more retailers into the formal economy can significantly boost government income.
- Simplified Compliance: The mobile app offers a user-friendly and convenient way for retailers to register and fulfill tax obligations.
- Reduced Evasion: Cross-checking data and audits can help curb tax evasion and promote fairness.
- Formalization of Economy: Documenting informal businesses can benefit the overall economic system.
Challenges and Considerations:
- App Accessibility: Ensuring widespread app access and awareness among all targeted retailers, especially in remote areas, is crucial.
- Data Accuracy: Reliable property and rental valuations are vital for fair and accurate tax assessment.
- Effective Implementation: Efficient execution of the scheme along with stringent regulatory mechanisms will be key to success.
- Addressing Trust Issues: Building trust and confidence among retailers about the benefits and fairness of the system is essential for achieving broader participation.
Conclusion:
The “Tajir Doost” initiative presents a promising strategy for expanding Pakistan’s tax base. By offering incentives, simplifying registration, and leveraging technology, the FBR can potentially encourage voluntary participation and achieve its revenue goals. However, effective implementation, transparent execution, and building trust among retailers will be critical for the long-term success of this ambitious project.
