KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has called for the revocation of the controversial Statutory Regulatory Order (SRO) 350 through proposed amendments in the upcoming budget for the fiscal year 2024-25.
In its budget proposals, the KCCI highlighted the detrimental impact of SRO 350(I)/2024, issued by the Federal Board of Revenue (FBR), which aimed to tackle the issue of “flying invoices.”
However, the chamber contends that the implementation of this SRO has inadvertently burdened all registered entities with cumbersome compliance requirements.
Despite undergoing four amendments, the implementation of SRO 350 remains impractical due to persistent inconsistencies, according to the Karachi Chamber. The chamber pointed out several practical challenges and criticisms that have emerged in response to the implementation of SRO 350:
1. Rule 5, Sub-Rule (2) requires registered individuals, Association of Persons (AOPs), and companies with only one shareholder to submit balance sheets showing business capital and assets in the bank. This creates unnecessary complications for various entities such as commercial importers, trading houses, wholesalers, and registered persons on the Active Taxpayers List (ATL), as they already submit these documents to the FBR at the time of filing Income Tax Returns.
2. Amendment in Rule 18, Sub-Rule (1) restricts the volume of sales to a maximum of five times the business capital of an entity. This rule fails to consider business practices and ground realities, especially regarding credit terms prevalent in the supply chain. Importers often operate on credit terms of 90, 120, or even 180 days, leading to sales volumes far exceeding the prescribed limit.
3. Clause C of the Circular referring to Sub-Rule (4) mandates the owners of the mentioned entities to visit NADRA Sahulat centers for biometric verification. This condition is deemed unnecessary for regular filers who are already on the ATL.
The Karachi Chamber emphasized that despite amendments and clarifications, SRO 350 exacerbates compliance challenges, fosters harassment and corruption, and discourages sales tax registrations. The chamber recommended withdrawing these changes and emphasized the importance of thorough consultation with stakeholders, including businesses and tax experts, before introducing any new measures to curb tax evasion through flying invoices.
The chamber urged a departure from the prevailing SRO culture and advocated for a model grounded in robust research and informed policy-making. This shift, according to the Karachi Chamber, is essential to ensure effective regulations without excessive burdens on businesses. As discussions continue regarding the budget for the fiscal year 2024-25, the fate of SRO 350 remains a focal point in the dialogue between the government and business community.
