Karachi, January 29, 2025 – In a move to streamline the tax system, the Federal Board of Revenue (FBR) has issued new procedures concerning the licensing, issuance of electronic sales tax invoices, and the integration of registered persons into the electronic invoicing system.
The announcement came with the issuance of SRO 69(I)/2025, which amends the Sales Tax Rules, 2006, to ensure greater accountability and efficiency in the collection of sales tax.
Licensing and Integration
As per the new rules, all registered persons are required to integrate their point of sale systems with the FBR’s computerized system for generating and transmitting electronic sales tax invoices. This will help in the automation and monitoring of taxable supplies. Rule 150Q outlines the procedure for integration, where registered persons must ensure that their hardware and software systems for invoicing meet the necessary requirements set by the FBR.
The new rules also mandate that these systems must operate through a licensed integrator, ensuring a standardized and secure transmission of invoice data. The FBR will notify specific groups of registered persons required to comply with this integration, and those who have already completed the process of integrating their point of sale systems will be considered compliant under the new rules.
Obligations of Integrated Persons
The integrated persons, as defined by the FBR, are required to install, register, and configure their electronic invoicing systems according to the guidelines issued by the FBR. These systems must perform various functions, including generating sales tax invoices, creating digital signatures, encrypting data, and transmitting invoices to the FBR’s system in real-time.
Furthermore, integrated systems must also generate a unique QR code, print it on the invoice, and ensure that every adjustment, modification, or cancellation is recorded. These records are essential for maintaining accurate logs, which will be subject to departmental audits.
The new rules also stress that integrated systems should be capable of detecting and reporting errors or any malpractice. If any discrepancies are detected, the system should automatically notify the FBR. This will further enhance transparency and prevent tax evasion.
Requirements for Payment and Surveillance
One of the most significant changes introduced by the FBR is the inclusion of electronic payment systems. All integrated persons will be required to ensure that their point of sale systems can accept payments through various digital means, including debit and credit cards, and must allow for the use of QR codes for these transactions. To support this initiative, the FBR may also mandate the use of CCTV surveillance in areas where electronic sales transactions take place.
Additionally, integrated persons must display signage at their outlets indicating their compliance with the FBR’s electronic invoicing system. This will serve to inform customers and authorities of their commitment to adhering to the new regulations.
Record-Keeping and Auditing
Another important aspect of the new regulations is the record-keeping requirement. Integrated persons must maintain electronic records of all invoices for a period of six years, which can be accessed during audits. The FBR’s Inland Revenue officers are authorized to monitor these records and perform audits as necessary to ensure compliance.
Moreover, integrated systems will automatically generate and store a complete sales record, which includes detailed information such as the name of the seller, recipient details, tax amounts, and descriptions of goods or services. This information must also be available for inspection by the relevant authorities.
Licensing of Integrators
Under the new rules, no person can carry out the integration of a registered person’s invoicing system without first obtaining a license from the FBR. The FBR has designated PRAL (Pakistan Revenue Automation Limited) as a licensed integrator for providing these services, ensuring that all systems are compliant with FBR requirements.
The licensing process for integrators is rigorous, and applications must be accompanied by several documents, including the company’s profile, technical capacity, financial stability, and a list of previous projects. The FBR also has the right to suspend or cancel the license of any integrator that fails to meet the prescribed standards.
Penalties and Non-Compliance
The FBR has also outlined severe penalties for non-compliance. Registered persons found tampering with their invoicing systems or failing to integrate their systems as required by law will face substantial fines, in addition to other punitive measures. Integrated persons who fail to comply with the new invoicing system will be penalized under the provisions of the Sales Tax Act.
Future Prospects
The new rules reflect the FBR’s ongoing efforts to modernize Pakistan’s tax system and curb the informal economy. By integrating electronic invoicing and implementing real-time monitoring, the FBR aims to increase tax compliance, reduce fraud, and improve revenue collection. This step is also in line with Pakistan’s broader digitalization efforts to boost economic growth and transparency.
In the coming months, businesses will need to adjust their operations to comply with the new rules, and the FBR is expected to provide further guidance and support to ensure a smooth transition to the electronic invoicing system. As Pakistan continues to embrace digital systems, these regulations are expected to play a critical role in shaping the future of tax administration in the country.