ISLAMABAD: The Federal Board of Revenue is learnt to have been contemplating a proposal put forward by the Pakistan Business Council (PBC) regarding the introduction of electronic invoicing within the sales tax supply chain from new fiscal year (2014-15).
According to the PBC budget proposals submitted to the FBR, the biggest element of corruption in sales tax is refunds in zero rated as well as normal tax regimes wherein supplier purchases invoice without any supply.
However legislation has been introduced section 8(1)(ca) & 73 and changes have been made in registration rules to curb the tendency but it creating hardships for the genuine businesses as well. The rationale behind the change is to reduce leakage through inadmissible refunds.
The PBC proposed that the use of electronic invoicing should be promoted in compliance with chapter XIV of Sales Tax Rules, 2006 to reduce the risk of claiming inadmissible input tax. Under the system, invoices issued by the supplier will be transmitted electronically to the buyer and FBR simultaneously. Further, the sales tax returns will also be updated on real time basis. This process will also be helpful for companies, which have a large customer/consumer base.
It further proposed that commercial importers are charged presumptive tax at the rate of 6 percent which is treated as their final tax liability. This puts the corporate sector especially the listed corporate sector at a disadvantage. The commercial importers should be brought into the normal tax regime.
