Karachi, October 16, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) has strongly urged the Federal Board of Revenue (FBR) to reconsider the recently imposed requirement for taxpayers to submit an affidavit alongside their sales tax return filings. This advisory comes in light of growing concerns about the potential implications of this regulation on the business community.
In a statement issued on Wednesday, KCCI President Muhammad Jawed Bilwani articulated the chamber’s apprehensions regarding the affidavit requirement. He emphasized that this mandate compels taxpayers to assert that the information they provide is entirely accurate and truthful. However, he pointed out that while taxpayers strive to ensure accuracy, they may unwittingly be penalized for the transgressions of vendors in the supply chain.
“It creates a perplexing scenario,” KCCI President Bilwani stated. “The FBR must clarify which vendors we should engage with or establish standard operating procedures (SOPs) for purchases. Currently, our due diligence only extends to verifying whether a vendor is blocked. If they appear compliant, we proceed with the transaction, unaware of any underlying issues.”
KCCI President Bilwani recalled that FBR officials had previously advised the business community to verify vendor credentials through the FBR website, a practice that had been commonplace for years. Yet, the new requirement for an affidavit introduces an additional layer of liability, particularly if a vendor is later found to be involved in tax evasion.
Moreover, he expressed concerns regarding the FBR’s transformation plan, which hints at an increase in audits. This development stands in stark contrast to the assurances provided by the Finance Minister during the budget speech, where it was promised that maximum utilization of IT and AI-enabled services would minimize human interaction in the audit process. “An uptick in audits necessitates more auditors, complicating procedures and potentially fostering corruption,” Bilwani remarked. He asserted that embracing technology would reduce the manpower needed at the FBR, ultimately lowering the exorbitant costs associated with tax collection.
While acknowledging that some aspects of the FBR’s transformation plan are commendable, Bilwani stressed that numerous issues require immediate attention. He urged for collaborative dialogue with the business community and relevant stakeholders to refine the transformation strategy and ensure its effectiveness.
Reflecting on a recent meeting with the FBR Chairman at Customs House in Karachi, Bilwani expressed optimism that the FBR would consider the concerns raised by the KCCI. He reiterated the pressing need for a taxation-friendly environment to foster business growth and bolster the overall economy. As the KCCI advocates for necessary reforms, the call for a reconsideration of the affidavit requirement is viewed as a critical step toward achieving a more equitable and efficient tax system in Pakistan.