Tax Laws (Second Amendment) Ordinance, 2019 provides harsh penalties for sales tax evasion

KARACHI: The government of Pakistan has promulgated the Tax Laws (Second Amendment) Ordinance, 2019, which notifies several amendments in the Sales Tax Act, 1990.

It provides penalties for the persons and businesses avoiding monitoring, tracking and reporting of sales, production and similar business transactions with the Federal Board of Revenue.

“Any person, who is integrated for monitoring, tracking reporting or recording of sales, production and similar business transactions with the Board or its computerized system, conducts such transactions in a manner so as to avoid monitoring, tracking, reporting or recording of such transactions, or issues an invoice which does not carry the prescribed invoice number or barcode or bears duplicate invoice number or counterfeit barcode, or any person who abets commissioning of such offence.

“Such person shall pay a penalty of Rs500,000 or 200 percent of the amount of tax involved, whichever is higher. The person shall, further be liable, upon conviction by a Special Judge, to simple imprisonment for a term which may extend to two ears, or with additional fine which may extend to Rs2.0 million, or with both.

“Any person who abets commissioning of such offence, shall be liable, upon conviction by a Special Judge, to simple imprisonment for a term which may extend to one year, or with additional fine of upto Rs200,000, or both.”

Moreover, persons and businesses failing to integrate the business for monitoring, tracking and recording of sales, production and other such transactions as required under the law, shall be liable to pay a penalty of Rs1.0 million. In case of continuous committing of such crime after 6 months of imposition of penalty, the business premises of such persons shall be sealed and an embargo shall be placed on the sales.

Manufacturers and importers of goods mentioned in Schedule Three to Sales Tax Act are required to print retail price on the goods as the tax is collected on the basis of retail prices on these goods. Persons failing to print retail price on the goods mentioned in Schedule Three shall pay a penalty of Rs10,000 or 5.0 percent of the amount of tax evaded, whichever is higher. Further, such goods shall also be liable to confiscation.

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