Lahore Chamber of Commerce Challenges New Sales Tax Rules in Pakistan

The Lahore Chamber of Commerce and Industry (LCCI) is contesting a recent amendment to the Sales Tax Rules, arguing it unfairly burdens compliant businesses.

SRO 350(I)/2024:

This Statutory Regulatory Order modifies the Sales Tax Rules of 2006. The LCCI claims it disproportionately impacts businesses like retailers, individuals, and associations (excluding manufacturers).

Concerns Raised by LCCI President:

  • Increased Compliance Burden: The new rules add complexity for businesses already following tax regulations.
  • Documentation Challenges: Retailers across various sectors lack the expertise and resources to handle the increased documentation requirements.
  • Biometric Verification: While potentially beneficial, mandatory biometric verification poses logistical hurdles. Non-compliance could restrict electronic return filing and require manual authorization.
  • Buyer Liability for Seller’s Mistakes: If a seller misses a filing deadline, the buyer’s tax liability might be recalculated due to adjustments and eliminated invoices.
  • Increased Discretionary Power: Electronic return filing exceeding five times the capital might require approval, raising concerns about increased bureaucratic hurdles.
  • Focus on Existing Taxpayers: The LCCI criticizes the FBR (Federal Board of Revenue) for focusing on existing compliant businesses instead of expanding the tax net to include new taxpayers.

Overall Impact:

The LCCI argues that SRO 350(I)/2024 discourages business growth and documentation within the tax framework. They urge the FBR to reconsider the amendment and explore alternative strategies to broaden the tax base.

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