Ombudsman calls for safeguards against penalties linked to FBR system failures and orders suspension of enforcement against compliant retailers
ISLAMABAD: The Federal Tax Ombudsman (FTO) has found genuine and substantiated grievances raised by Tier-1 retailers over persistent operational problems in the Federal Board of Revenue’s (FBR) newly introduced Point of Sale (POS) system.
According to the FTO Annual Report 2025, a complaint was filed before the FTO by the Retailers Association on behalf of Tier-1 retailers, who highlighted recurring technical disruptions affecting their businesses.
The retailers reported several problems, including sudden expiry of POS profiles, automatic disconnection of invoices, failure of sales data to synchronise with the central portal, frequent upload errors and repeated disconnectivity messages.
They also complained about the absence of a bulk download facility, unannounced software version changes and the lack of official download links or timely notifications regarding system updates.
According to the complaint, businesses had no advance mechanism to alert them about POS system downtime or disconnections. At the same time, enforcement staff were reportedly sealing the premises of compliant retailers and raising questionable tax demands.
The retailers maintained that such enforcement actions reflected a lack of technical understanding of POS-related issues and were contributing to mistrust among the business community.
FBR fails to resolve recurring POS problems
The FBR defended its enforcement measures but, according to the FTO assessment, failed to provide effective explanations or solutions for the recurring POS-related problems.
The Ombudsman also noted the absence of a structured mechanism for communicating software updates, maintenance schedules and error-resolution procedures in a timely manner.
Field formations reportedly acknowledged having limited access to the technical body responsible for POS infrastructure, which further delayed the resolution of system-related problems.
After reviewing the complaint, the FTO concluded that the retailers’ grievances were genuine and substantiated.
It observed that although the POS system was introduced to improve transparency, ensure proper revenue collection and broaden the tax base, weaknesses in implementation were causing unnecessary hardship to compliant businesses.
The Ombudsman held that penalising taxpayers for system-related failures, including sealing business premises, amounted to maladministration and could undermine efforts to promote voluntary tax compliance and documentation.
FTO recommends corrective measures
The FTO recommended several corrective measures to address the identified shortcomings.
These included extending the validity of POS security tokens and introducing an advance warning mechanism for system disconnections and scheduled maintenance.
It also recommended providing retailers with a bulk download facility for invoices and sales records and strengthening coordination between FBR’s technical units and field formations to ensure the timely resolution of POS errors and operational disruptions.
The Ombudsman further recommended technical training for field officers and the appointment of qualified focal persons to deal with POS-related complaints and provide assistance to taxpayers.
In addition, quarterly consultations with the retailers’ association were directed to address emerging issues affecting the business community.
Enforcement against compliant retailers to be suspended
The FTO also directed that enforcement action against compliant retailers be suspended until the identified system-related anomalies were rectified.
The FBR was required to submit a compliance report within 60 days, outlining the steps taken to implement the recommended corrective measures.
The decision underscores the need for reliable POS infrastructure and stronger coordination between FBR’s technical and enforcement wings, particularly as the tax authority seeks to expand documentation and improve compliance among large retailers.