Islamabad, June 21, 2025 – In a significant decision for Pakistan’s formal retail sector, the Federal Tax Ombudsman (FTO) has ordered the Federal Board of Revenue (FBR) to immediately halt the sealing of Tier-1 retail outlets.
The directive comes in response to widespread complaints of technical failures and enforcement irregularities within the Point of Sale (POS) integration system used by major retailers.
The ruling follows a formal complaint submitted by the Chainstore Association of Pakistan (CAP), which detailed persistent issues including POS malfunctions, costly integration demands, arbitrary disconnections, delayed invoice syncing, and a lack of coordination between the FBR and its technology arm, Pakistan Revenue Automation Limited (PRAL). CAP argued that these problems have placed unnecessary strain on Tier-1 retail outlets attempting to comply with tax regulations.
The FTO criticized the FBR’s enforcement approach, stating that sealing Tier-1 retail stores without resolving systemic issues is both unjust and counterproductive. The FTO directed the FBR to suspend any further closures until all POS-related technical flaws are corrected. This includes improving token validity, reducing downtime, and enhancing the overall integration experience for retail businesses.
In its order, the FTO emphasized that POS security tokens should now remain valid for a minimum of five years, and retailers must be given sufficient notice before expiration. Moreover, the FBR has been instructed to create a pre-warning system to alert retailers in case of potential disconnection, token expiry, or system failure.
A major development stemming from the ruling is the FBR’s submission of a Change Request Form (CRF) to introduce a bulk download feature for POS data—a long-standing demand of the retail community. The FTO has urged that this feature be deployed without delay to ease invoice management and reconciliation.
Additionally, the FBR announced that POS integration services offered by PRAL will now be provided free of cost, following the introduction of SRO 69(I)/2025. This move is expected to relieve Tier-1 retail outlets of the burden of paying third-party vendors who charged up to Rs10 per invoice or Rs1 million annually.
To ensure sustained improvements, the FTO has recommended quarterly consultations between the FBR, CAP, and other stakeholders to monitor system performance and address emerging issues in real-time.
Retail industry leaders have welcomed the FTO’s verdict, viewing it as a progressive step toward fairer enforcement, improved tax compliance, and a more supportive environment for Pakistan’s formal retail sector.