Tax rules tweaks provide for integration of electronic invoices with FBR system

• Commissioner given suspension powers over fake invoices.
• Manufacturers to also report details of goods supplied.
• Inauthentic invoices to result in suspension of registration.

ISLAMABAD: The Federal Board of Revenue (FBR) has amended the Sales Tax Rules, introducing two key changes including suspension of registration for sales tax due to fake invoices and mandatory integration for electronic invoicing, ensuring compliance and transparency in tax transactions, The News reported on Sunday.

The FBR has amended the Sales Tax Rules 2006 and stated that where a Commissioner, having jurisdiction, is satisfied that a registered person has issued fake invoices, evaded tax or committed [tax fraud in terms of clause (37) of section 2 of the Act], registration of such person may be suspended by the commissioner through the system, without prior notice, pending further inquiry.

The basis for such satisfaction may include, among others: (A) the registered person not existing at the declared address; (B) refusal to grant access to premises under Sections 40B/40C or refusal to provide records under Sections 25/37 of the Act; (C) business activity exceeding five times the declared capital and liabilities; (D) making over 10% of purchases from or supplies to another suspended person during the suspension month (excluding suspensions under clause B or where the value exceeds Rs. 50 million, whichever is higher); (E) failure to file sales tax returns for three consecutive months or filing null returns for six months; (F) involvement in tax fraud; or (G) any other reason specified by the Board.

In the Sales tax rules, all registered manufacturers supplying taxable goods shall furnish, in Annex-J of the monthly return, details of goods manufactured or produced and goods supplied: Provided further that all registered commercial importers, distributers, wholesalers supplying taxable goods shall furnish, in Annex-H1 of the monthly return, details of such goods purchased or imported and goods supplied.

About procedure for licensing, issuance of electronic sales tax invoices, and integration of registered persons, provisions of this Chapter shall apply to them for electronic integration of their hardware and software used for generation and transmission of electronic invoices through a license integrator or otherwise as provided in these rules.

The Board shall notify such registered persons or class of registered persons through a notification in the official Gazette for sub-rule (1): Provided that the registered persons who have already registered and integrated their point of sale with the Board’s computerised system shall be treated as having been integrated with the Board’s computerised system under these rules.

Under the Sales Tax Rules, all registered manufacturers supplying taxable goods must report, in Annex-J of the monthly return, the details of goods manufactured or produced, as well as goods supplied. Furthermore, all registered commercial importers, distributors, and wholesalers supplying taxable goods must report, in Annex-H1 of the monthly return, the details of goods purchased or imported, along with the goods supplied.