FBR mulls online integration of service providers’ transactions

KARACHI: The Federal Board of Revenue (FBR) is mulling to digitally integrate transactions of service providers much like big retailers in a bid to expand its tax net to the sector that holds the biggest share in the economy, it was learnt on Thursday.

FBR issued draft of the rules to make it mandatory for service providers to install electronic fiscal device (EFD) to record their procurement and supply transactions. Under the draft of rules, FBR outlined 12 sectors: restaurant, hotel, intercity road transporter, courier service, personal care/beauty parlour, medical practitioner, laboratory, hospital, health club, photographer, accountant, and pharmacy.

The revenue body launched online integration of businesses under income tax laws in order to examine transactions of service providers. The FBR is intending to bring services of various sectors into the tax net. It already started integration of businesses under sales tax by making installation of point of sale mandatory for big retailers, or classified as tier-1 retailers.

The drafted rules said no sale or service from the notified establishment should be rendered without being recorded by the duly accredited EFD, which means a system composes of one sale data controller and at least one POS connected together.

The FBR said the EDF would enable revenue authorities and taxpayers to receive, record, analyze and store fiscal data; format fiscal data into fiscal invoice or bills; transmit the fiscal data to the FBR’s computerised system through secure means; and print invoice or bill.

The FBR said all companies as defined under Income Tax Ordinance, 2001 are required to install the electronic fiscal device. Other than companies, the taxpayers located in eight major cities of the country would also be required to install the device. The cities include Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Multan, Peshawar and Gujranwala.

Sources in Regional Tax Office (RTO-II) Karachi said data of such service providers have already been obtained through physical survey. They said online integration of businesses would require service providers to share their daily financial transactions and invoices made on the basis of clients.

The sources said service providers are operating in the undocumented economy, which results in huge revenue losses to the national exchequer.

The sources said recently the RTO-II Karachi under its broadening of tax base exercise identified a large number of medical practitioners and individuals in personal care, who were deriving large sum of amount on daily basis but their revenue contribution was either nominal or nil.

The drafted rules said the integrated enterprises or service providers would be required to provide access to FBR. Further, any tempering or concealing data would be punishable under the law.