Karachi, November 9, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) expressed its strong opposition on Saturday to the recent reinstatement of the affidavit requirement for filing sales tax returns. KCCI President Muhammad Jawed Bilwani sharply criticized the move, demanding the immediate suspension of the affidavit mandate until substantial consultations with stakeholders have been conducted and effective alternatives identified.
Bilwani emphasized that the Federal Board of Revenue (FBR) had previously acknowledged the problematic nature of this requirement by temporarily suspending it for September 2024. At the time, the FBR issued a press release confirming that the affidavit would not be required for that tax period and pledged to engage with stakeholders to gather proposals for addressing the persistent issue of fraudulent sales tax claims. The FBR had committed to exploring these stakeholder suggestions until October 31, with the aim of finding a balanced approach. However, Bilwani lamented that, despite this assurance, no consultations have occurred, nor have any viable alternative solutions been examined.
“This unilateral decision disregards the overwhelming pressures already faced by the business community,” Bilwani asserted, highlighting the growing operational challenges for businesses. He criticized the requirement as an added burden that introduces unnecessary bureaucracy and creates an atmosphere of intimidation for businesses trying to comply with the law.
The affidavit obligation, according to Bilwani, places unreasonable demands on taxpayers and their chief financial officers (CFOs). He pointed out that CFOs and taxpayers are now being asked to affirm the legitimacy of tax credits connected to invoices from suppliers, even though their ability to verify such information is limited to FBR’s online resources. “Taxpayers simply cannot be held accountable for the authenticity of upstream invoices in the supply chain, which they have no direct means of verifying,” he noted, adding that the FBR already possesses extensive powers for auditing and investigation. Expecting individual taxpayers to bear responsibility for verifying these credits, he argued, is an abdication of FBR’s own responsibilities.
Bilwani further expressed concern over the severe legal repercussions associated with non-compliance. The affidavit requirement compels CFOs to vouch for the accuracy of submitted returns under the threat of imprisonment, with penalties reaching up to ten years under Section 33(13) of the Sales Tax Act of 1990. “This is a misplaced expectation, particularly when legal proceedings on similar matters are ongoing,” he added, urging the FBR to rethink its stance.
The KCCI concluded its statement by reiterating its call for the FBR to remove the affidavit requirement and, instead, focus on solutions that do not unfairly burden taxpayers for issues that lie beyond their control.
