FBR’s latest stringent terms disrupts business operations, report reveals

The Federal Tax Ombudsman report states latest move complicates sales tax return submissions and supply chain

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The Federal Board of Revenue (FBR) has introduced a new notice aimed at curbing the use of fake and bogus invoices, but this move is reportedly causing widespread disruptions in supply chains and business activities across Pakistan, said a Federal Tax Ombudsman (FTO) report.

The notification, issued under SRO 350(I)/2024, has not only complicated the submission of sales tax returns but has also led to operational challenges for businesses, according to the report.

The FTO, after receiving numerous complaints from registered taxpayers, expressed serious concern over the complications arising from the FBR’s crackdown on fraudulent invoices.

The FTO noted that the notification, intended to prevent the misuse of tax invoices, is creating unintended negative consequences for businesses, particularly in the supply chain.

Businesses are finding it difficult to submit sales tax returns on time, which is further disrupting their daily operations.

In response to these challenges, the FTO has issued directives to the FBR, urging it to immediately resolve the complexities caused by the notice.

The FTO called for the FBR to update its IRIS system and provide detailed guidance to taxpayers on how to comply with the new rules without impacting their operations.

The FTO’s ruling also highlighted that while previous issues related to SRO 1130(I)/2024 had been resolved, the recent SRO 350(I)/2024 has introduced new hurdles for businesses.

The report emphasised the need for the FBR to simplify the process for submitting sales tax returns and consider implementing technology-based solutions.

One suggestion was to create an automated system that would allow businesses engaged in mutual transactions to file their sales tax returns simultaneously, reducing the burden on taxpayers.

Additionally, the FTO recommended that buyers in transactions be designated as withholding agents, which could further streamline the tax filing process.

This proposal, if implemented, could help reduce the complexity of filing returns and ease the burden on businesses.

The FTO stressed that the FBR must take swift action to address the concerns raised by businesses and ensure that its efforts to combat fraudulent practices do not adversely affect legitimate business activities.

The board has been asked to provide additional support to registered taxpayers to help them navigate the new regulations.