KARACHI: Taxpayers in Pakistan are grappling with challenges in e-filing sales tax returns following recent amendments to the Sales Tax Rules of 2006 aimed at combating sales tax fraud.
The amendments mandate the submission of business capital details for both new and existing importers, exporters, retailers, wholesalers, and distributors. Additionally, they introduce annual biometric re-verification for all registered individuals and reinstate the pre-verification requirement for fresh sales tax registrations.
While these changes seek to bolster the Federal Board of Revenue’s (FBR) controls and deter fraudulent activities, they have inadvertently created obstacles for taxpayers in fulfilling their compliance obligations.
Munawar Manekia, an advocate and tax consultant, shed light on the challenges faced by taxpayers. He noted that under the new rules, sales tax returns are only accepted once the suppliers of the taxpayers have filed their respective returns. Moreover, taxpayers must pay recomputed sales tax after removing purchase invoices and input tax post the due date, further complicating the process.
Manekia criticized the FBR for not consulting stakeholders before implementing the amendments. He highlighted that the new requirements entail a sequential process where suppliers must submit sales tax returns first, followed by wholesalers providing their balance sheets for approval by the Commissioner, before taxpayers can file their returns.
Expressing concern, Manekia cautioned that this sequential approach might reduce the overall number of tax filers. He urged the FBR Chairman to reconsider the amendments and implement remedial measures to ensure maximum ease for taxpayers.
While the FBR’s efforts to improve tax compliance and combat evasion are commendable, the implementation challenges underscore the necessity for a more collaborative approach with the business community. Effective dialogue and cooperation between tax authorities and taxpayers can lead to solutions that address compliance concerns while fostering a conducive environment for economic growth.