The organised retail sector in Pakistan is encountering significant challenges due to strict tax policies, as highlighted by the Chainstore Association of Pakistan (CAP) on July 16, 2025. CAP leaders expressed their frustration over arbitrary assessments and harassment from tax authorities, despite the sector’s substantial contributions to tax revenue and exports.
The measures introduced in the Finance Act of 2025 are expected to exacerbate these issues, potentially hindering economic growth and development. Additionally, the SITE Association of Industry in Karachi has rejected new provisions that grant excessive powers to the Federal Board of Revenue (FBR). In the following sections, we will examine these concerns, their impacts, and the calls for reform based on statements from CAP and industry representatives.
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CAP Chairman Asfandyar Farrukh highlighted the sector’s commitment to adopting technology and transparent reporting. “Retail chains in the formal sector have worked tirelessly for years to implement technology, ensure transparent sales reporting, and significantly contribute to the nation’s tax revenues and exports,” he stated. However, businesses continue to face arbitrary assessments and daily harassment.
Although formal retailers account for 10% of retail trade, they generate a significant portion of tax revenue. Patron-in-Chief Tariq Mehboob has accused the FBR of using enforcement tactics to meet their targets, imposing penalties on compliant firms.
The SITE Association of Industry Karachi has condemned Sections 37A and 37B of the Finance Act. These sections allow officers from the Federal Board of Revenue (FBR) to arrest taxpayers based on suspicion and file First Information Reports (FIRs).
