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FBR expedites efforts to bring big retailers into tax net

FBR expedites efforts to bring big retailers into tax net

KARACHI: Federal Board of Revenue (FBR) has expedited efforts and launched a campaign to bring big retailers into the sales tax net.

Official sources at Regional Tax Office (RTO) – III Karachi said the drive has been launched in the wake of mushroom growth of retail outlets across the city. The said that the tax office is gathering information about the goods supplied to retail outlets on the basis of invoices issued by distributors, manufacturers and wholesalers.

Government, in the budget for the fiscal year of 2017/18, amended Sales Tax Act 1990, redefining tier-1 or big retailers, in order to net them. Now, they are required to pay sales tax of 17 percent under the value-added mode. Before the amendment, sales tax collected from retailers through electricity bills was considered as final discharge of sales tax liability.

The sales tax law defines tier-1 retailer as one who operates: a unit of a national or international chain of stores; in an air-conditioned shopping mall, plaza or centre, excluding kiosk; an outlet with a cumulative electricity bill of Rs600,000 for the past one year; and unit engaged in bulk import and supply of consumer goods on wholesale basis to retailers as well as on retail basis to consumers.

Under a statutory regulatory order (SRO 1125(I)/2011), retailers supplying finished goods to five export-oriented sectors are to pay sales tax at reduced or nil rates. Such retailers have also been given an option to pay 2 percent turnover tax, including on exempted supplies, without any input tax adjustment.