FBR to start biometric verification of registered sales tax payers

KARACHI: The Federal Board of Revenue (FBR) has decided to verify all the registered sales taxpayers after the board found that a large number of registration certificates were issued to fake entities, sources said on Monday.
Presently, around 115,000 registered units are filing their sales tax statements and returns against which multibillion rupees of refunds are claimed.
Several genuine taxpayers are unable to receive the due refunds because of the fake claimants and facing cash flow problems. “The procedure of the verification process has already been drafted and under that taxpayers have to go through biometric verification,” said a source.
The official said the FBR will issue the guidelines within the next couple of days.
The sources said in the first phase the FBR will verify sales tax registration of all the corporate units, including manufacturers under the procedure laid down in the sales tax registration process. In the next phase, the registered businesses, individuals and retailers and wholesalers will be verified.
Businesses related to manufacturing, import, services, distribution, wholesale and retail are required to have sales tax registration and are charged sales tax on their supplies under the sales tax laws.
The FBR recently conducted a survey of regional tax offices and identified that the fake sales tax registration continued despite several checks.
The revenue body, therefore, is weighing a new verification drive to curb bogus refunds claims. Even, it has made the biometric verification mandatory for the new registration.
The sources said in June the tax authorities implemented a foolproof sales tax registration system to discourage fake and bogus entities, but some tax officials are still registering fake businesses.
Sources at the Regional Tax Office (RTO) Karachi said the senior management took notice of this matter. “The data of registrations granted after office hours are also being compiled,” a source told The News. The sources said the present Members of Inland Revenue (Policy and Operations) have taken strict action in eradicating bogus entities, which were causing billions of rupees of annual losses to national exchequer through fake invoices.
They said the purpose of the new verification drive is to broaden the existing tax base.
In the past, the indirect taxes in the broadening tax base were mainly neglected because of the issuance of bogus invoices.