ByOn January 29, 2025, the Federal Board of Revenue (FBR) of Pakistan issued SRO No. 69(I)/2025, introducing significant amendments to the Sales Tax Rules, 2006. These changes mandate the implementation of an electronic invoicing (e-invoicing) system, requiring certain businesses to integrate their sales and transaction systems directly with the FBR’s computerized platform. The primary objective is to enhance tax compliance, ensure real-time reporting, and minimize tax evasion.
Applicability of the E-Invoicing System
The e-invoicing system applies to a broad spectrum of taxpayers, including:
- Retailers: Both Tier-1 and non-Tier-1 retailers are encompassed. Tier-1 retailers are those registered under sales tax and engaged in substantial retail operations.
- Wholesalers and Distributors: Entities involved in wholesale distribution are required to comply.
- Commercial Importers: Importers dealing in commercial goods fall under this mandate.
- Manufacturers: All manufacturing units are included in the scope.
Key Features of the E-Invoicing System
The newly introduced e-invoicing system encompasses several critical components:
- Real-Time Integration: Businesses must link their invoicing systems with the FBR’s computerized system to facilitate real-time reporting of sales transactions.
- Mandatory Invoice Particulars: Each electronic invoice must contain specific details, including:
- Unique FBR invoice number
- Verifiable QR code
- Registration number of the invoicing software
- FBR’s official logo
- Seller’s name, address, and registration number
- Buyer’s name, address, and registration number (if applicable)
- Date of invoice issuance
- Tax period
- Description and quantity of goods or services
- Value exclusive of tax
- Applicable tax rates and amounts
- Total discount offered
- HS code (if applicable)
- CCTV Monitoring: The FBR may require businesses to install CCTV cameras at points of sale to monitor transactions. Recordings must be retained for at least one month and provided to the FBR upon request.
- Digital Payment Integration: Businesses are encouraged to integrate digital payment methods, such as debit and credit card machines or QR codes, at all points of sale.
Compliance and Reporting Obligations
To adhere to the new regulations, businesses must:
- System Integration: Ensure their invoicing systems are fully integrated with the FBR’s platform for real-time data transmission.
- Data Accuracy: Maintain accurate records of all sales transactions, as the FBR will auto-fill relevant sections of the sales tax return based on the electronic invoices submitted.
- Error Reporting: Implement systems capable of detecting and reporting any malpractices or errors to the FBR promptly.
- Record Retention: Retain electronic invoices and related records for a minimum of six years.
Penalties for Non-Compliance
Failure to comply with the e-invoicing requirements can result in substantial penalties:
- Initial Penalty: A fine of up to PKR 1 million may be imposed.
- Continued Non-Compliance: If non-compliance persists beyond two months, the business premises may be sealed by Inland Revenue officers.
- Escalating Penalties: Repeated defaults can lead to escalating fines, reaching up to PKR 3 million, along with the sealing of business premises.
Looking Forward
he implementation of SRO No. 69(I)/2025 marks a significant shift in Pakistan’s tax administration, emphasizing transparency and real-time monitoring. Businesses falling within the specified categories must promptly integrate their systems with the FBR’s e-invoicing platform to ensure compliance and avoid severe penalties. This move is anticipated to enhance tax collection efficiency and foster a culture of accountability within the business community.
