FBR Adopts Mystery Shopping to Combat Tax Evasion

FBR Adopts Mystery Shopping to Combat Tax Evasion

Karachi, December 29, 2023 – The Federal Board of Revenue (FBR) has initiated a mystery shopping program aimed at scrutinizing sales tax invoices issued by major retailers.

The FBR, in line with its commitment to combat tax evasion, issued updated Sales Tax Rules for the tax year 2024, outlining the procedure for conducting mystery shopping activities.

Under the updated rules:

1. Authorized Mystery Shopping Entities: Mystery shopping activities will be carried out by individuals or firms duly authorized by the FBR. This strategic approach allows for an impartial assessment of sales tax transactions conducted by big retailers.

2. Random Selection of Tier-1 Retailers: Authorized entities will conduct mystery shopping on a random basis, focusing primarily on tier-1 retailers. This ensures a diverse and comprehensive evaluation, covering a representative sample of major players in the retail sector.

3. Verification Through Online FBR System: The authorized entities will verify sales tax invoices using the online system of the FBR. This technological integration aims to streamline the verification process and promptly identify any discrepancies. In case of encountering fake or invalid invoices, the authorized entities are mandated to report the matter to the FBR for necessary action, adhering to relevant provisions of the Act and the associated rules.

4. Reporting by General Public: The updated rules empower any individual who comes across a fake or invalid invoice to report the matter directly to the FBR. This open reporting mechanism encourages public participation in ensuring tax transparency and compliance.

5. Reward System for Informers: Those individuals reporting instances of fake or invalid invoices can potentially be rewarded. As per the provisions of section 72D of the Act, informers may claim a reward based on the detection and recovery made as a result of their report. This incentivizes individuals to actively contribute to the fight against tax evasion.

This initiative underscores the FBR’s commitment to fostering a culture of tax compliance and transparency within the business community. By leveraging mystery shopping, the FBR aims to not only detect potential instances of tax evasion but also to deter such practices through increased vigilance.

The mystery shopping program is expected to act as a powerful tool to ensure that retailers adhere to their tax obligations and issue genuine sales tax invoices. This proactive approach aligns with the broader national strategy to strengthen the tax base and create a fair and accountable business environment.

As the FBR intensifies its efforts to combat tax evasion, the business community and the general public are encouraged to collaborate by providing information on any suspicious transactions. This collective effort is vital for ensuring a level playing field and fostering economic growth through a transparent and compliant taxation system.