Govt to ask IMF about fixed tax regime for traders.

Byline: Mubarak Zeb Khan

ISLAMABAD -- Pakistan's top tax machinery has linked approval of a fixed tax regime for small to medium traders with prior approval of the International Monetary Fund's review mission, which is scheduled to arrive here on Sunday.

On Oct 28, the IMF mission - headed by Ernesto Ramirez Rigo - will start review of Pakistan's first quarter (July-September) performance as part of the $6 billion Extended Fund Facility (EFF).

It will complete the exercise in two weeks.

An official source in the finance division told Dawn that during the review, the Fund officials would hold meetings with all stakeholders, including the Federal Board of Revenue, State Bank of Pakistan, those in the power sector, to assess the country's performance against the benchmark set for the first quarter.

According to the source, Adviser to Prime Minister on Finance Dr Hafeez Shaikh and FBR Chairman Shabbar Zaidi will hold meetings on the sideline with the IMF officials to convince them that a scheme for traders was needed. 'We will try to convince them to get some favourable scheme for traders,' the official said.

The traders have demanded a fixed tax regime, carrying an exemption from sales tax and withholding tax, with a threshold of Rs150 million sales per annum. They have also demanded a minimum tax rate as fixed tax rate.

According to the official, these are the demands of traders. 'We can't commit on these demands,' he said, adding the demands would be taken up with the Fund officials. 'We will do advocacy for it as being under the Fund's programme,' he said, adding some close-level understanding might be achieved.

Fund's mission due in Islamabad tomorrow for two weeks to assess performance

FBR Chairman Shabbar Zaidi told Dawn that his team was in talks with traders. 'We have already reached an understanding with traders on the fixed tax rates,' he said. However, he added, the FBR wanted fixed tax regime on an area basis, while traders demanded it on the basis of turnover.

The chairman said the FBR had no issue even on a turnover basis that could be introduced for small to medium traders only, but 'we have to take up this issue with donor agencies'.

Mr Zaidi said traders in the tier-1 would remain on the point of sales position. 'We have not finalised anything so far,' he said, adding that an attempt would be made to finalise the deal before the countrywide traders' protest scheduled for Oct 29 and 30.

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