ISLAMABAD: Business leaders are urging the Federal Board of Revenue (FBR) to postpone the requirement for taxpayers to submit an affidavit with their Sales Tax Returns. They argue that while taxpayers can verify suppliers’ status through the FBR system, they often lack insight into the entire supply chain and could be unfairly penalized for mistakes made by vendors, despite providing accurate information to the best of their ability.
Muhammad Jawed Bilwani, President of the Karachi Chamber of Commerce and Industry (KCCI), stated that the affidavit requirement forces taxpayers to certify the complete accuracy of the information submitted. He pointed out that, while they strive to provide correct information, errors by vendors could lead to penalties for the taxpayers.
Bilwani noted, “This creates a very confusing situation,” and suggested that the FBR either specify which vendors businesses should purchase from or establish Standard Operating Procedures (SOPs) for procurement. He emphasized that the current FBR checks only confirm whether a vendor is blacklisted; if a vendor is deemed compliant, purchases proceed without further scrutiny.
He recalled that FBR officials had previously advised the business community to check vendor status on their website, a practice that has been common for years. However, with the new affidavit requirement, taxpayers are now at risk of penalties if their vendors engage in tax evasion.
In a separate statement, Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association (PTEA), echoed these concerns, calling for the deferral of the affidavit requirement from the Chief Financial Officer (CFO). He emphasized that buyers lack access to the multi-tier supply chain and can only verify a supplier’s status through the FBR system to confirm if they are on the Active Taxpayer List (ATL).
Holding buyers accountable for the entire supply chain is illogical, he asserted, urging the government to create a more conducive business environment that boosts trade volumes and, consequently, tax revenues.
Mukhtar added, “We do not condone any wrongdoing and strongly advocate for compliance with tax policies. However, the government must develop a strategy that restores confidence in the business community.” He also highlighted that the FBR owes billions in legitimate refunds to businesses, which are currently facing a 19% financial burden due to delays. He warned that such stringent measures will only exacerbate the challenges faced by legitimate businesses.
