FBR Proposes Suspending ST Registration for Flying Invoices

FBR Proposes Suspending ST Registration for Flying Invoices

(PKRevenue.com) – The Federal Board of Revenue (FBR) has proposed a significant measure to combat tax evasion by suggesting the suspension of sales tax (ST) registration for individuals and entities issuing flying invoices.

Sources within the FBR revealed on Monday that tax managers have recommended several proposals for the forthcoming 2024-25 budget. One key proposal is the suspension of sales tax registration for those involved in issuing flying invoices. This move aims to tighten the regulatory framework and curb the widespread practice of generating fraudulent tax documents.

Under the current Sales Tax Act of 1990, the registration of individuals or entities issuing fake invoices can be suspended. However, the FBR is now advocating for the inclusion of “flying invoices” in this provision, thereby granting tax authorities broader powers to suspend sales tax registration. Flying invoices refer to invoices issued without actual sales transactions, often used to claim undue tax credits or refunds.

By expanding the scope of the law, the FBR aims to enhance its ability to identify and penalize those engaging in this deceptive practice. The issuance of flying invoices not only results in significant revenue loss for the government but also undermines the integrity of the tax system.

An FBR official explained, “The proposed amendment is crucial for strengthening our efforts against tax fraud. By targeting flying invoices, we can better enforce compliance and protect the tax base.”

The introduction of this measure is part of a broader strategy by the FBR to increase tax compliance and boost revenue collection. In recent years, the FBR has intensified its efforts to detect and prevent tax evasion through various initiatives, including digital monitoring and enhanced audit mechanisms.

The proposal to suspend sales tax registration for flying invoices is expected to be included in the upcoming budget announcement. If implemented, it would represent a significant step towards reinforcing the FBR’s commitment to transparency and accountability in tax administration.

Stakeholders in the business community have expressed mixed reactions to the proposed measure. While some welcome the move as a necessary step to ensure fair competition and compliance, others are concerned about the potential for overreach and the impact on legitimate businesses inadvertently caught in the regulatory net.

As the FBR prepares to present its budget proposals, the inclusion of stringent measures against flying invoices underscores its resolve to tackle tax fraud head-on and secure Pakistan’s fiscal health.