The Federal Board of Revenue (FBR) is taking steps to promote digitalization and enhance documentation of economic activity in Pakistan. One of the initiatives introduced by FBR is the Synchronised Withholding Administration & Payment System (SWAPS). This system aims to bring corporate entities into the digital world and streamline the process of tax administration.
SWAPS is a centralized platform that enables taxpayers to file their tax returns and pay their taxes online. It integrates with other tax administration systems such as Point of Sale (POS), maximum online filing, CREST, and sales tax return via Iris portal. This systematic upgrading of FBR will not only increase transparency but also provide a more convenient way of doing business.
Furthermore, the Tax Laws (Third Amendment) Ordinance 2021 stipulates that if a company makes payments exceeding Rs. 250,000, other than through digital means, they will be inadmissible, subject to certain exclusions. However, due to impracticalities and lack of proper digital infrastructure, this law was not being implemented effectively. The Finance Supplementary Act 2022 further delayed the implementation of this law until notified otherwise by the Board.
The above provisions have now been included in the Finance Bill, along with a proposal to enhance the limit of Rs. 250,000 on a single account head to Rs. One million. This amendment will provide some relief to businesses that have struggled to comply with the digital payment requirement.
It is essential for companies in Pakistan to move towards digitalization and embrace SWAPS as it will increase their efficiency, reduce their operational costs, and improve their credibility with FBR. The use of technology will enable businesses to maintain accurate financial records, streamline their tax payment process, and reduce the risk of errors.
Moreover, with the rise of e-commerce and online transactions, the need for digital payment methods has become even more crucial. This initiative by FBR will not only promote the growth of the e-commerce industry but also enhance the government’s revenue collection efforts.
To summarize, SWAPS is a step towards digitalizing corporate entities in Pakistan. The initiative aims to streamline tax administration, increase transparency, and promote the growth of the e-commerce industry. It is essential for businesses to embrace digitalization and comply with the digital payment requirements to stay relevant in the digital world.
