Karachi, July 30, 2024 – The Federal Board of Revenue (FBR) has postponed the implementation of biometric verification requirements until August 31, 2024, as announced by the FBR Chairman.
FBR Chairman Amjad Zubair Tiwana during a meeting with the business community at the Karachi Chamber of Commerce and Industry (KCCI) on Tuesday.
The deferral comes in response to significant disruptions in the FBR’s biometric verification services. The KCCI highlighted these issues, attributing the delays to incompatibility between FBR and the National Database and Registration Authority (NADRA) data systems. This incompatibility has caused a deadlock, hindering timely verification and processing for taxpayers and leading to considerable inconvenience for businesses.
The KCCI has recommended eliminating the biometric verification process altogether, citing the challenges and disruptions caused by the current system. “Given the challenges and disruptions caused by the current system, it is recommended to eliminate the FBR’s biometric verification requirement. This step would bring ease in doing business,” the KCCI suggested.
Challenges with Biometric Verification
Sales tax registered taxpayers have reported significant difficulties in obtaining the required biometric verification from NADRA e-Sahulat centers, as mandated by SRO 350(I)/2024. Issued on March 7, 2024, the SRO stipulates that individuals, Associations of Persons (AOPs), and single-member companies registered for sales tax must undergo annual biometric re-verification every July.
Taxpayers have encountered error messages such as “CNIC does not exist,” leaving many concerned about meeting the original July 31, 2024, deadline. This issue has prevented numerous taxpayers from completing the verification process, potentially resulting in their inability to file monthly sales tax returns without special permission from their respective jurisdiction’s Commissioner.
Despite generally supporting the measure to combat fake invoices and improve compliance, the business community has highlighted several issues with its implementation. They urged the FBR to address these technical problems promptly to ensure smooth compliance with the new regulations and avoid potential disruptions in tax filing processes.
Government’s Response and Future Plans
In response to these concerns, the FBR Chairman assured the business community that the FBR would not insist on biometric verification until the extended deadline. This postponement is intended to allow sufficient time to resolve the technical issues and ensure a smoother process for taxpayers.
“The government is committed to facilitating businesses and ensuring that compliance measures do not become burdensome,” stated the FBR chairman. He emphasized the importance of public-private partnerships in overcoming these challenges and moving forward with necessary reforms.
Implications for Businesses
The deferral of the biometric verification requirement offers temporary relief for businesses struggling with the current system. However, the underlying issues between the FBR and NADRA systems must be addressed to prevent future disruptions. The FBR’s commitment to resolving these technical problems and potentially revising the biometric verification process could significantly improve the ease of doing business in Pakistan.
As the extended deadline approaches, businesses are advised to stay informed about updates from the FBR and prepare for any changes in the verification process. The FBR’s efforts to streamline compliance measures will be crucial in maintaining confidence and stability in the tax system.
The KCCI and other business associations continue to work closely with the government to advocate for policies that support business growth and efficiency. The resolution of these biometric verification issues will be a critical step in enhancing the overall business environment in Pakistan.