The Federal Board of Revenue (FBR) has revised its Sales Tax Rules, introducing two key changes to enhance tax compliance and transparency. The amendments include the suspension of sales tax registration for issuing fake invoices and the mandatory integration of electronic invoicing.
Suspension of Registration for Fake Invoices
According to The News, the FBR has amended the Sales Tax Rules 2006. Under the new rules, a Commissioner with jurisdiction can now suspend the registration of any person without prior notice if they are satisfied that the person has issued fake invoices, evaded tax, or committed tax fraud. This suspension would be pending further inquiry.
The Commissioner’s satisfaction may be based on various factors, including:
- The registered person not being present at their declared address.
- Refusing access to premises or records as required by law.
- Business activity that is more than five times the declared capital.
- Making over 10% of purchases from or supplies to another suspended person.
- Failing to file sales tax returns for three consecutive months or filing null returns for six months.
- Involvement in tax fraud.
- Any other reason specified by the Board.
Mandatory Electronic Invoicing and Reporting
The new rules also make electronic invoicing mandatory. All registered manufacturers who supply taxable goods must now report the details of goods manufactured, produced, and supplied in Annex-J of their monthly returns. Similarly, all registered commercial importers, distributors, and wholesalers must report the details of goods purchased, imported, and supplied in Annex-H1.
To facilitate this, provisions have been introduced for the licensing and issuance of electronic sales tax invoices. Registered persons will be required to integrate their hardware and software, used for generating electronic invoices, through a licensed integrator or other specified methods. The FBR will notify the specific classes of registered persons who must comply with this new rule. However, those who have already integrated their point-of-sale systems with the FBR’s computerized system will be considered as having met the new requirements.
