In an earlier press release, the Federal Board of Revenue (FBR) announced that since 2019 the number of Points of Sales (POSs) integrated with the FBR invoicing system had reached 5783 POSs as 286 retailers had integrated their systems with FBR and successfully reported the sales tax invoices in real-time.
Initially, the integration started as voluntary and went live on 1 November 2018. The mandatory integration, however, took effect as from 15 December 2019.
How does the POS invoicing system work in Pakistan?
It is a computerised real-time sales documentation system that records sales or purchase data transactions, manages inventory, and maintains customer data. The FBR has requested businesses to integrate their POSs with the system to make sure the tax paid by the end customers at the cash counter has been settled in the Board records. For integration, retailers need to install a software extension provided by the FBR on their system to ensure real-time sales tax reporting to the Board’s server.
Who is currently in the scope?
All Tier-1 retailers are required to integrate all their POSs with the Federal Board of Revenue’s invoicing system. Tier-1 retailers are identified, according to the Sales Tax Act 1990 section 2 (43 A), as any of the following categories:
- A retailer operating as a unit of a national or international chain of stores;
- A retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
- A retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds PKR 1,2 million (ca. EUR 6500,00);
- A wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on a wholesale basis to the retailers as well as on retail basis to the general body of the consumers”; and
- A retailer whose shop measures 93 m2 in area or more.
Extension of the scope with the latest Ordinance
On 15 September 2021, the Pakistani Federal Board of Revenue has published the Tax Laws (Third Amendment) Ordinance 2021. One of the key measures of this ordinance is that the FBR may, by notification in the official Gazette, require any taxpayers or taxpayer groups to integrate their invoice issuing machines with the Board's system for real-time reporting at any point of time after the ordinance took effect.
Pakistan is not the only county that implemented a fiscalisation model. As we reported in one of our previous updates, Albania had already completed the implementation of its monitoring system with all taxpayers being in the scope.