The government had recently made it mandatory for the dealers to implement CNIC based invoicing system. The condition was to obtain the CNIC of the retailer or dealer for every transaction that is above Rs 50,000.
This condition was unacceptable for the traders and countrywide protest was held to protest against the new policies of the government. There were many rounds of negotiations between the government and the traders but, were futile and the implementation of this policy was delayed till August 2019.
Traders argued that in a highly un-documented economy it is not possible for them to implement a CNIC based invoicing system and checking the tax filer or non-filer status of every buyer.
On the other side, FBR chairman Shabbar Zaidi said that, it is not possible that the undocumented trade can continue undocumented and the officials of the FPCCI also spoke in favor of the government and said that it is simply not possible for a country’s economy to prosper, where even less than 0.1% of the total population are paying their taxes.
One thing is for sure that, once this policy is implemented, it will have a domino effect on the whole economy. First, the economy will slow down due to the decline in economic activity, as most of the businesses in Pakistan are undocumented. That will disrupt the supply chain of many export industries, hence this will reduce exports as well.
According to experts this disruption in the supply chain will cause a negative effect initially but as the traders start becoming filers, the economic activity will come back to normal and the businesses will start working normally.
This step will greatly broaden the tax net and it will increase the tax revenue of the country in the long run, which is a prerequisite for any economy and country to prosper.