Islamabad, Sep 14: Tier-2 merchants may be eligible for a five-year minimum tax relief from the federal government.
According to sources, members of the Ministry of Finance and the State Minister for Finance and Revenue chaired a meeting where this topic was covered. The Federal Board of Revenue, the Ministry of Information Technology, and the State Bank of Pakistan were also present at the meeting.
The adoption strategy for a digital transaction system was covered in the discussion. In Pakistan, cash is used in about 95% of retail transactions (customer to retailer). Media has been informed by sources that the government may also implement a phased tax exemption scheme, in which the tax break is progressively reduced over a five-year period to enable retailers to gradually adapt to the new system.
The government’s plan toward zero pricing for Rapid Person to Merchant (P2M) transactions for receiving merchants was also discussed at the meeting. Improving the ability of financial institutions to use merchant transaction data is a crucial step in this direction since it allows them to enter the data-based lending market.
According to the sources, legislative and policy initiatives aimed at establishing strong data security and data-sharing guidelines need to be launched. Approximately 84% of transactions in Pakistan are still done over the counter, according to State Bank officials, and this percentage needs to be compelled to rise to account- or wallet-based payments.
The central bank also suggested that in order to eliminate alternatives like over-the-counter purchases, government agencies should begin collecting digital payment methods.The bigger currency value notes (Rs. 5,000 notes) were eliminated, and the currency notes were changed to enforce the shift from cash-based to digital or account-based payment methods.
Participants in the meeting also discussed tax breaks for banks that handle more digital transactions than others. Because to the Federal Investigation Agency’s (FIA) lax scam control measures, the general public steers clear of digital payment platforms and mobile wallets.
The participants decided that Pakistan ought to research India’s digitization strategy as well, and the committee would keep Pakistan’s prime minister informed about the country’s transition to digital commerce.
