Karachi, October 17, 2024 – The Federal Board of Revenue (FBR) has eased the requirement for submitting an affidavit alongside the sales tax return for September 2024, which is due to be filed in October. This relaxation follows appeals from trade bodies and aims to build trust among all stakeholders, the FBR announced on Thursday.
The decision comes after considerable pressure from trade bodies, which had expressed concerns over the new affidavit condition. In response, the FBR stated that alternative proposals to curb the submission of falsified sales tax returns would be accepted until October 31, 2024. These proposals will help shape future policy in ensuring transparency in the tax submission process.
While the affidavit requirement has been relaxed, the FBR stressed that this does not signal any weakening of enforcement under the Sales Tax Act of 1990. The FBR reaffirmed that false declarations, the use of fake or flying invoices, and the suppression of sales remain serious offences. Taxpayers are urged to exercise extreme caution when filing their returns, as violations can lead to both monetary penalties and criminal prosecution under Section 33 of the Sales Tax Act.
According to the FBR, the decision to introduce the affidavit was driven by alarming findings during a data-driven analysis of sales tax returns filed by major businesses. This analysis revealed widespread fraudulent practices, particularly a lack of due diligence by authorized representatives and Chief Financial Officers (CFOs). Discrepancies were found within sectors and sub-sectors, suggesting that many companies were not accurately reporting their sales.
The FBR underscored that the affidavit was meant to hold CFOs and authorized representatives accountable for the accuracy of the tax returns they submit. By requiring an affidavit, the FBR intended to emphasize the existing legal responsibilities of these individuals under Section 26 of the Sales Tax Act. However, after receiving numerous complaints from trade bodies, including the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), about the difficulties caused by the affidavit, the FBR chose to temporarily relax the condition.
The FBR clarified that the affidavit did not impose any new legal obligations but served as a reminder to taxpayers of the potential criminal liability for submitting false information. Moving forward, the Board remains committed to enhancing tax compliance while ensuring that stakeholders’ concerns are addressed in a constructive manner. The relaxation of the affidavit requirement represents an effort to balance regulatory enforcement with the practical challenges faced by businesses.