FBR Cracks Down on Tax Evasion with Mandatory POS Integration for Major Retailers

Pakistan’s Federal Board of Revenue (FBR) is taking a big step to improve tax collection with the mandatory integration of Point-of-Sale (POS) systems for 1,680 large retailers (Tier-1). This initiative aims to tighten tax controls, ensure accurate sales reporting, and ultimately boost government revenue.

Penalizing Non-Compliance

The move follows stricter regulations outlined in the 2019 Finance Act. Previously, Tier-1 retailers who failed to integrate their POS systems faced a 15% reduction in input tax. Now, that penalty has been significantly increased to 60%, incentivizing swift compliance.

Who Needs to Integrate?

Tier-1 retailers are defined as those whose withholding tax exceeded Rs. 100,000 in the past year. These businesses are now required to register and integrate their systems with the FBR’s platform for real-time sales reporting.

Strict Deadline and Clear Guidelines

A deadline of May 31, 2024, has been set for integration. The FBR has issued a detailed Sales Tax General Order (STGO) outlining the process and providing a list of affected retailers. Businesses can contest their Tier-1 classification by following the procedures outlined.

Consequences of Non-Compliance

Starting in June 2024, non-compliant retailers will face automatic disallowance of their input tax claims, resulting in immediate tax demands.

Benefits of the Initiative

This initiative is part of a larger FBR plan to modernize tax collection. By leveraging technology, the Board aims to reduce tax evasion and improve compliance among major retailers. Experts believe this will create a fairer playing field and enhance the government’s ability to collect sales tax.

Cooperation and Support

Retail associations and businesses are encouraged to cooperate with the new regulations. The FBR is offering ongoing support and guidance to facilitate a smooth integration process.

A Step Towards a Stronger Economy

The enforcement of mandatory POS integration signifies a crucial effort by the FBR to strengthen Pakistan’s tax base, a key factor for the country’s economic stability and development.

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