FBR, CAP deal for PoS integration to provide retailers with level playing field

Retail businesses across the country welcomed the signing of a Memorandum of Understanding (MoU) between the Federal Board of Revenue (FBR) and Chainstore Association of Pakistan (CAP) to ensure effective and efficient integration of Point of Sales (PoS)/tills installed at

Tier1 retailers across the country.

According to the press release issued on Wednesday, CAP committees will be formed at central and regional levels in order to facilitate smooth integration and to collectively manage any bottlenecks. CAP has assured FBR that all Tier1 retailers would duly and fully integrate their tills/PoS without any exception by November 30. The association would also augment FBR’s efforts to improve the PoS system and make it foolproof. Besides, CAP will assist FBR in the identification of all Tier1 and Tier2 retailers who are liable to be integrated but have not yet integrated, the press release reads further. The foundational principle of this MoU and the benefits agreed to by FBR is complete integration by Tier1 retailers with FBR’s system by November 30. Speaking to Profit, CAP President Rana Tariq Mehboob said that this is an extremely important agreement and a gamechanger in terms of tax compliance in the country. He added that the Tier1 retail sector has joined hands with FBR to serve as torchbearers in tax compliance for the rest of the country for the first time in Pakistan.

“We are confident that as a result of this agreement our country will soon see significant increases in government revenues and in the future easeofdoing business will be the hallmark of this agreement for all Integrated businesses,” Mehboob said.

The CAP president maintained current tax laws were made for a preintegration tax period and changes were required to the same for the PoS Integration era.

WHO WILL BENEFIT FROM IT?

This agreement covers the entire Tier1 retail sector of over 60,000 outlets represented by CAP, a DGTO approved association created for Tier1 retailers nationwide.

Mehboob shared that in the future CAP will be playing the role of a key partner of the FBR in spearheading the PoS Integration initiative by ensuring that CAPFBR committees are formed not only to review and resolve local issues pertaining to integration but also have permanent working committees at the federal level.

“The scope of the committees is clear that all integrated businesses should prosper and serve as a positive example for all nonintegrated retailers while ensuring 100 per cent tax compliance for the FBR,” he said.

He shared that the adjustment in tax rates has been made according to the particular needs of business segments and solid business rationale. CAP Senior Vice Chairman Asfandyar Farrukh told Profit that the main benefits will be realised once the FBR implements the reduced tax rates and audit relief for integrated retailers. “These incentives will help create a level playing field for highrevenue lowmargin retailers that are otherwise unable to stay competitive with small retailers that benefit from staying under the tax radar and weak enforcement,” Farrukh said.

He maintained that all tier1 retailers, whether superstores or fashion retailers, will benefit once the MoU is fully implemented as only when tax rates are low and compliance is hasslefree can businesses compete with the informal sector. “The tax base will only widen once all fully documented retailers are able to thrive more than the undocumented,” he opined. WAY FORWARD: Mehboob said that after implementation of this agreement, there would be no hurdles left for the growth of the PoS integration initiative and for the integrated retail sector to flourish.

“Even for the GST rate of 17pc still prevalent across many sectors of retail such as grocery, electronics etc, we have committed to work with the FBR through federal committees in trying to bring this down in the future based on the expected jump in the tax collection.