Sales tax returns: KCCI demands suspension of affidavit requirement

KARACHI: President Karachi Chamber of Commerce and Industry (KCCI) Muhammad Jawed Bilwani, while vehemently condemning reinstatement of the requirement to file an affidavit with sales tax returns, demanded that the authorities must suspend the affidavit requirement immediately until comprehensive consultations are conducted and effective alternative measures are established.

President KCCI stated that in response to KCCI’s request, FBR rightly withdrew this burdensome requirement for September 2024 and the same was notified through a press release wherein it was categorically mentioned that a) The filing of an affidavit will not be needed for returns for the tax period of September 2024, which are due in October 2024. b) The FBR will actively solicit alternative proposals from stakeholders until October 31 to address the serious issue of falsified sales tax returns. c) The Board will consider modifying the affidavit requirements in light of legitimate stakeholder concerns.

“No consultations with stakeholders regarding this matter have occurred, nor have any viable alternative solutions been explored”, Bilwani said, adding that the business community was already grappling with immense pressures, and this ill-conceived requirement only serves to exacerbate their challenges, contributing to unnecessary hassles and an environment of intimidation.

He was of the view that the obligation to file this affidavit was fraught with significant challenges. Taxpayers and their employees, including CFOs, cannot possibly provide guarantees or assurances regarding tax credits that may arise from fraudulent or fictitious invoices linked to their suppliers and subsequent tiers in the supply chain. “The ability to verify suppliers’ registration status as active taxpayers is limited to what is available on the FBR’s website”, he said, adding that as FBR has comprehensive powers such as auditing, verification, and investigation to ensure tax compliance, it is unreasonable to expect individual taxpayers, who lack these capabilities, to shoulder the burden of responsibility for issues that the FBR must address.

He stated that FBR’s move to compel Chief Financial Officers (CFOs) to submit an affidavit along with sales tax returns for the tax period commencing in September 2024 places undue pressure on filers to verify the accuracy of submitted returns, while ominously threatening severe legal repercussions, including potential arrest under Section 37(A) and imprisonment for up to ten years as outlined in Section 33(13) of the Sales Tax Act of 1990. “Matters which are already sub-judice at different legal forums should not be made part of the affidavit” he added while urging the FBR not to place responsibility on filers to assure transparency in the entire supply chain as it is neither logical nor legal.

Copyright Business Recorder, 2024