ISLAMABAD: The Federal Board of Revenue is likely to notify amended sales tax registration procedure once the Law and Justice Division cleared the proposed amendments after vetting.
It is to be noted that comprehensive amendments to the special procedure for sales tax registration have been proposed by the FBR to do away with existing faulty system. The prevailing system lacks provision to physical verify declared business premises of the applicants seeking Sales Tax Registration Numbers (STRNs).
The FBR preferred to amend the existing procedure for sales tax registration which likely to be notified in the current month. The sales tax law makes mandatory the registration of manufacturers, retailers, importers, wholesalers, distributors and commercial exporters. According to experts the existing registration system is not a risk-based system, with faulty verification mechanism. Description of goods and HS Codes are not available for sectoral analysis, profiling and checking misuse of invoices. They are of the view that registration data does not help in thorough analysis of the returns.
The FBR has adopted a two-pronged strategy for sales tax registration which consists of cleansing existing database and evolving a risk-based system for new entrants. The cleansing exercise envisages that premises will be verified through GPS enabled devices by using application with business activity code. There will be online interface for updating missing information like HS Code, utility connection number, etc.
Under the system, new application will be processed according to the risk parameters which have already been defined on the basis of declaration risks and third party risks. In case of low risk, registration would be allowed merely on GSM verification. For medium and high risk cases, registration will be allowed after verification of documents and GSM verification. It is expected that the utilisation of declared capital information will help control fake invoices.
The system, having linkages with WeBOC and Expeditious Refund System (ERS) will provide a centralised single source of information managed through a unified database, and will help in correct return analysis and elimination of invoice misuse.
