KARACHI: In a significant move to modernize tax collection and combat tax evasion, the Federal Board of Revenue (FBR) has introduced new regulations for electronic sales tax invoicing. The changes, outlined in S.R.O. 69 (I) / 2025, amend the Sales Tax Rules, 2006, and aim to streamline the process of generating, transmitting, and storing electronic invoices.
Key Changes in the New Regulations
The new rules, which come into effect immediately, require all registered businesses to integrate their electronic invoicing systems with the FBR’s computerized system. This integration will ensure real-time reporting of sales transactions, making it easier for the FBR to monitor compliance and reduce tax evasion.
1. Mandatory Integration of Electronic Invoicing Systems:
– Businesses must register, install, and integrate their electronic invoicing hardware and software with the FBR’s system.
– All sales must be made through integrated systems, and no paper invoices will be accepted unless explicitly allowed by the FBR.
– The systems must generate, record, and transmit invoice data securely to the FBR, including unique FBR invoice numbers and QR codes for verification.
2. Enhanced Monitoring and Compliance:
– Businesses must ensure that their systems are capable of detecting and reporting any malpractices or errors in real-time.
– The FBR may require businesses to install CCTV cameras at sales points to record transactions, with recordings retained for at least one month.
– Businesses must prominently display FBR’s official logo and registration numbers at all integrated sales points.
3. Licensing for System Integrators:
– Only licensed integrators will be allowed to integrate businesses’ systems with the FBR’s platform.
– The FBR has established a licensing committee to evaluate and approve integrators, ensuring they meet strict technical and financial criteria.
– PRAL (Pakistan Revenue Automation Limited) will act as the primary licensed integrator, offering free integration services to registered businesses.
4. Penalties for Non-Compliance:
– Businesses found tampering with the system or failing to comply with the new rules will face penalties under the Sales Tax Act, 1990.
– The FBR’s enforcement network will conduct regular inspections to ensure compliance, and businesses found using non-integrated systems will be subject to tax recovery and penalties.
Impact on Businesses
The new regulations are expected to have a significant impact on businesses, particularly small and medium-sized enterprises (SMEs). While the integration of electronic invoicing systems may involve initial costs, the FBR has assured that PRAL will provide free integration services to ease the burden.
Businesses will also need to ensure that their systems are capable of generating and transmitting electronic invoices in real-time, including during periods of internet or power outages. Invoices generated during such disruptions must be clearly marked as “offline” and uploaded to the FBR’s system within 24 hours of restoration.
Broader Implications for Tax Collection
The introduction of these regulations is part of the FBR’s broader efforts to digitize tax collection and reduce tax evasion. By requiring real-time reporting of sales transactions, the FBR aims to improve transparency and increase tax revenues.
The new rules also align with the Electronic Transactions Ordinance, 2002, which recognizes electronic documents and transactions as legally valid. This move is expected to encourage more businesses to adopt digital payment methods, further reducing the reliance on cash transactions.
The FBR’s new regulations for electronic sales tax invoicing mark a significant step forward in Pakistan’s efforts to modernize its tax system. While businesses may face initial challenges in complying with the new rules, the long-term benefits of increased transparency and reduced tax evasion are expected to outweigh the costs.