“Beauty of Taxation” – an innovative approach to female empowerment

Women Empowerment by Educating Beauty Salons Entrepreneurs

At first, few would dare to associate taxation with beauty. But the two can be combined as evidenced by the collaboration of Punjab Revenue Authority (PRA) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), in the Beauty Industry of Punjab.

The Beauty Salons Industry is abundantly spread throughout the province of Punjab, particularly in larger cities such as Lahore and Faisalabad. Beauty Salons provide a variety of different services such as haircut, manicure, pedicure, bridal make-up and much, much more. As such, Beauty Salons are liable to pay the Sales Tax on Services as per second schedule of the Punjab Sales Tax on Services Act. What is even more exciting is that this sector is dominated by female entrepreneurs whereas almost all other sectors in Pakistan are dominated by males.

Until recently, the Beauty Salon industry has remained largely untouched by the Punjab Revenue Authority. Recognizing the large revenue potential in the sector, it was decided to devise a strategy to support the smooth inclusion of this service into the tax net. One of the measures was to organize awareness events for the industry in Lahore and Faisalabad.

These awareness sessions brought together important players in the Beauty industry and provided a platform for them to be educated about their obligations to comply with the Sales Tax on Services Act. It also included sessions for Salon owners to learn how to register with the PRA, how to file returns and how to calculate the correct amount of Sales Tax. Finally, it provided a platform for Salon owners to engage with PRA officers and to ask question and/or raise concerns.

The first workshop took place in Lahore in June 2016. It was attended by a number of leading female figures in the province who are also engaged in the Beauty industry. The guest of honour was the Honorable Finance Minister of Punjab, Dr. Aisha Ghous Pasha. It was a taxation workshop where the majority of participants were women, which is indeed a worldwide rarity! A second workshop took place in Faisalabad in August 2016 where the guests of honour were female members of the Provincial Assembly.

The Beauty Salon awareness events generated huge media interest as evidenced by the dozens of newspaper articles in addition to TV segments and significant social media buzz.

Since Beauty Salon operators are mostly female entrepreneurs, giving consideration to women empowerment, it made our work even more effective and achieved more sustainable results. So this measure also contributed towards promoting gender equality and women empowerment through educating female entrepreneurs in particular and fostering a culture of compliance among them.

Results:

The comparative analysis of the Beauty Salons Sector regarding registration and tax revenue collections is shown in the table and charts below:

The number of registered taxpayers increased by 108.5% and the revenue collections increased by 170.4% after this innovative initiative.

The current number of registered beauty salons is only a fraction of all beauty salons running in Pakistan. So, continuing conducting these awareness workshops for the Beauty Salons Sector in other cities will definitely contribute towards better tax administration through enhancement in tax bases and increased tax revenue collections.

Creating awareness is the very first step on the way to smoothly incorporate the Beauty Salons Industry into the tax net. Follow-on measures will include one-on-one registration and return filing assistance and the possible roll-out of a Salon Invoice Monitoring System (SIMS), which will be a web based monitoring tool enabling real time capturing and monitoring of invoices issued by the salons to ensure proper declaration of Punjab sales tax on services collected for promoting Sales Tax Compliance in the Beauty Salons industry.

On the back of these workshops, the Salon industry has also successfully established their first hair and salon association for taxation which is set to meet with senior PRA officials on a regular basis serving as the first ever platform to voice out and resolve their issues directly with the Government Authorities, thus, bridging the gap between the state and citizens.

Since Beauty Salon operators are mostly female entrepreneurs and giving consideration to women empowerment makes our work more effective and achieves more sustainable results so this measure has also contributed towards ‘GIZ’s Gender Strategy’ of promoting gender equality and women empowerment through educating female entrepreneurs in particular and fostering a culture of compliance among them.

It’s time for people to appreciate the true beauty of taxation!

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