Debit and Credit Cards
The Federal Board of Revenue (FBR) has introduced a major reform aimed at digitalizing Pakistan’s economy by making debit and credit card payments mandatory for businesses, replacing traditional cash transactions.
This initiative aligns with Pakistan’s commitments to the International Monetary Fund (IMF) and is designed to enhance revenue collection, improve transparency, and curb tax evasion.
In the initial phase, tier-one retailers and large businesses are required to install point-of-sale (POS) machines that are directly linked to the FBR’s computerized system.
Additionally, to ensure compliance, the government has decided to monitor business transactions through CCTV surveillance. These measures are part of a broader effort to integrate businesses into the documented economy and enhance tax collection efficiency.
Economic experts have largely welcomed the move toward digital payments, recognizing its alignment with global financial trends. Economist Dr. Khaqan Najeeb pointed out that many countries have already transitioned to digital transactions, making this step necessary for Pakistan’s economic modernization.
However, while supporting the policy, economist Dr. Sajid Amin cautioned against presenting the initiative as solely a taxation tool. “If documentation is introduced merely to expand the tax net, it will naturally face resistance,” he explained, emphasizing the need for a smooth and transparent rollout.
Despite its potential benefits, experts have also highlighted several challenges that could hinder the policy’s implementation. Taxation specialist Dr. Ikram-ul-Haq stressed that before enforcing digital transactions on businesses, the government must first modernize its own financial operations. “If the government itself continues to process salaries using outdated book adjustments, how can it expect businesses to fully digitize?” he questioned, urging internal reforms within public institutions.
Financial inclusion is another critical concern, particularly in rural areas where access to digital banking remains limited. Economic expert Dr. Khalid Walid noted that Pakistan has a relatively low penetration of debit and credit cards.
However, he suggested that microfinance banks, which are well-integrated into rural communities, could help bridge this gap and facilitate the transition toward digital transactions.
Under the new law, all businesses will be linked to the FBR’s system, allowing the government to compile transaction data on a daily, weekly, and monthly basis.
Electronic invoices will be stored for six years, and any attempt to manipulate transaction records will result in legal action against those responsible. These strict measures aim to improve transparency and prevent tax fraud.
As Pakistan moves toward a more digitalized economy, the success of this initiative will depend on the government’s ability to address concerns raised by businesses and economic experts.
Effective implementation, coupled with efforts to increase financial inclusion and modernize public institutions, will be essential in ensuring that this transition benefits both businesses and the economy as a whole.
