31 January 2025 Pakistan amends sales tax rules for implementation of electronic invoicing
The Pakistan Federal Board of Revenue (the Board) has issued SRO.69(I)/2025, dated 29 January 2025, introducing significant amendments to the Sales Tax Rules, 2006. These changes primarily focus on the issuance of electronic invoices and the integration of point-of-sale (POS) systems. The previous Chapters XIV (Special Procedure for Issuance of Electronic Invoices between Buyers and Sellers), XIV-AA (Online Integration of Tier-1 Retailers), and XIV-BB (Integration of Electronic Invoicing and Licensing) have been consolidated into a single Chapter XIV, now titled "Procedure for Licensing, Issuance of Electronic Sales Tax Invoices, and Integration of Registered Persons." (For background, see EY Global Tax Alerts: Pakistan Federal Board of Revenue to require electronic invoices for some consumer goods, dated 4 January 2024; and Pakistan taxpayers required to issue electronic invoices for fast-moving consumer goods must request extensions until government approves software providers, dated 1 February 2024.) These rules apply to all registered persons for the electronic integration of hardware/software for the issuance of electronic invoices and POS integration. Through SRO.28(I)/2024, dated 10 January 2024, the Board had already notified various categories of persons required to integrate their systems for electronic invoicing. Persons who have already integrated their POS systems with the Board will be considered compliant under these new rules. Notified persons must register and integrate their electronic invoicing hardware and software; they are required to report information about all their outlets and points of sale or electronic invoicing machines to the Board. All supplies (both taxable and exempt) must be made exclusively through integrated systems. The rules outline the particulars to be included on invoices issued through the integrated system. The integrated system must perform the following functions:
Real-time, verifiable electronic invoices are required to be issued for every taxable supply and service. It is important to note that while Rule 150R requires electronic invoices for both taxable and exempt items, Rule 150S specifies that this requirement applies only to taxable supplies and services. Debit and credit notes must also be issued electronically through the integrated system. Invoices (along with debit and credit notes) must be retained for six years. Integrated persons must provide access to their records for audits. The Board may issue instructions for technical audits. The concerned Commissioner may extend the integration deadline by a maximum of 60 days, during which integrated persons must issue paper invoices. Noncompliance with these rules may result in penalties and restrictions. Integrated persons are responsible for the functionality of their hardware and software; any disruptions must be reported to the concerned Commissioner within 24 hours, along with documentary evidence. Invoices issued by integrated persons can be verified through the Board's system. Invoices issued during periods of disruption (such as power or internet outages) must be clearly marked as offline and uploaded within 24 hours. Tax authorities may monitor system operations through periodic visits. Only individuals granted a license under these rules are authorized to integrate registered persons. The Pakistan Revenue Automation Pvt. Limited (PRAL) has been designated as a licensed integrator, providing free services. Licensees may charge fees for integration services, subject to Board specifications. The requirements and procedures related to licensing have been moved from Chapter XIV-BB to Rules 150XE to 150XQ. The amendments would require the notified persons, including multinational companies, to invest in technology and adapt their operations to ensure compliance with new electronic invoicing and POS integration requirements, which may lead to increased administrative burdens and costs.
Document ID: 2025-0376 | ||||||