FBR chief assures Senate panel: Failure to accept credit, debit cards to result in closure of business

ISLAMABAD: In a bid to digitise the taxation stream, the government has sought powers to seal shops and business premises if the Federal Board of Revenue (FBR) finds non-certified electronic receipts from the premises.

The FBR wants to collect Rs70 billion in the coming fiscal year through such drastic measures.

These powers have been sought under proposed amendments in the Sales Tax Act, FBR Chairman Amjad Zubair Tawana testified before the Senate Standing Committee on Finance and Revenue on Friday.

The Senate standing committee was convened for the second consecutive day to deliberate and finalise recommendations on the Finance Bill 2024. During the third round of discussions, Sales Tax provisions were focused.

The amended budget for 2024 aims to enhance transparency within the system and combat tax fraud. It was emphasised that any business entity found with three receipts per week without a Point of Sale (POS) system will face closure. Additionally, it was proposed that the FBR oversee the licensing of POS software companies.

In response to queries regarding past fraud incidents involving POS systems, the FBR chairman clarified that the fraudulent activities were identified and later transpired that some sales record was removed from the POS. He further explained that the new integrated licensing system, managed by a third-party integrated company, will provide comprehensive oversight, thereby enhancing online sales visibility.

Committee Chairman Saleem Mandviwalla also advocated for leniency in the case of sales returns, suggesting that penalties should be preceded by warnings. Furthermore, it was disclosed that a penalty of Rs5 lakh will be imposed for non-compliance with POS requirements. Through the integrated licensing system, the FBR now possesses a dashboard to monitor the operational status of POS machines across various retail outlets.

During discussions on Sales Tax provisions, Senator Sherry Rehman raised concerns regarding retailers’ reluctance to accept credit/debit cards. In response, the FBR chairman assured the committee of implementation of measures to enforce card payments as obligatory. Non-compliance, including failure to accept credit or debit cards, may result in business closure. The FBR would also address consumer complaints, with action initiated based on a threshold of three complaints per day or five per week. Retailers found guilty of tax evasion will face blacklisting and retain the right to appeal to the chief commissioner.

Furthermore, committee members proposed an amendment to revise the wording from “any” to “full” concerning the amount of payment received by suppliers.

After the recess, the Senate Standing Committee on Finance and Revenue was briefed by representatives of the Pakistan Software Association, All Pakistan Textile Mills Association (Aptma), and Stationery Association about the problems they confront due to high taxation, making it difficult for them to run their businesses in these extraordinary circumstances.

The committee recommended that the FBR chairman discuss the matter with the representatives of these associations and subsequently brief the committee. The committee was of the view that stationary items should be exempted from sales tax, considering Pakistan has 22.5 million children aged 5 to 16 out of schools. Additionally, the committee decided to defer deliberations on sales tax until next meeting.

Moreover, the committee rejected the amendment concerning the ‘Abandoned Properties Organisation’ and stated that the Finance Bill should be limited solely to financial matters.

In attendance were Senator Mohsin Aziz, Senator Sherry Rehman, Senator Farooq Hamid Naek, Senator Anusha Rahman Ahmad Khan, Senator Shahzaib Durrani, Senator Manzoor Ahmad Kakar, the FBR chairman FBR and other senior officials of relevant departments.