Karachi, January 25, 2025 – The Federal Board of Revenue (FBR) has officially deactivated the mandatory affidavit requirement for filing sales tax returns, a move aimed at simplifying compliance for businesses.
The FBR submitted a formal statement to the Sindh High Court (SHC), requesting the disposal of ongoing petitions challenging this requirement.
According to the FBR, the affidavit mandate, previously enforced for monthly sales tax returns by Chief Financial Officers (CFOs), has been rescinded in compliance with the SHC’s order dated November 1, 2024. Consequently, the previous verification process at the time of filing sales tax returns has been reinstated.
The FBR emphasized that this decision resolves the grievances raised by the petitioners, further urging the court to conclude the matter. This development comes after months of deliberation and criticism surrounding the affidavit requirement, which had placed additional responsibility on CFOs.
In October 2024, the FBR had introduced the affidavit obligation as part of its strategy to curb the widespread issue of fake and flying invoices. These fraudulent practices have contributed significantly to Pakistan’s staggering tax gap of Rs. 3.4 trillion. The FBR’s initiative sought to hold CFOs accountable for ensuring the authenticity and accuracy of their companies’ sales tax returns.
An internal directive issued by FBR Chairman Rashid Mehmood explicitly warned CFOs against approving fraudulent invoices. The Chairman declared that the FBR would not hesitate to pursue criminal proceedings against CFOs found complicit in filing falsified sales tax returns. “We will take strict legal action against CFOs involved in endorsing fraudulent tax filings,” he asserted.
Under the previous guidelines, CFOs were required to submit affidavits affirming the accuracy of their companies’ sales tax filings. These affidavits needed to verify that:
• Declared turnover and supply values were reported accurately.
• No fake or flying invoices were incorporated by vendors or supply chain entities.
• All invoices corresponded to taxable supplies as outlined in annexures.
• No fictitious figures were entered into the returns or annexures.
The FBR’s decision to remove the affidavit requirement reflects its responsiveness to industry concerns while maintaining its commitment to addressing tax fraud. This step is expected to ease compliance burdens and foster a more collaborative relationship between the FBR and taxpayers.