FBR urged to make Google pin location must-have for retailers

KARACHI: The Federal Board of Revenue (FBR) has been asked to make Google pin location mandatory for Tier 1 retailers to stop misusing sales tax registration for point of sale ( POS).

The Pakistan Business Council (PBC), in its 2022/2023 budget proposals submitted to the FBR, proposed to have Google pin the location of Tier 1 retailers.

READ MORE: Commercial importers abuse tax registration

The PBC has suggested measures to prevent the misuse of outlets by importers who use a fake retailer registration profile.

In order to take advantage of or misuse the reduced rate of 12% sales tax on textile supplies (which is available on the supply of finished textile items through an integrated point-of-sale system for retail outlets), some unscrupulous people, after importing raw materials, get toll bills issued on their behalf from other manufacturers.

Subsequently, these imported raw materials are sold as finished textile articles through outlets integrated into the FBR system to benefit from a reduced sales tax rate of 12%.

READ MORE: FBR urged to massively cut tax rates for filers

FBR, see notification dated January 4, 2022, has already clarified that sourcing in bulk through the point of sale is equivalent to being treated as wholesale and would therefore be subject to the standard rate of 17% sales tax.

To prevent this unscrupulous practice, the following should be made mandatory for entities whose imports represent more than 70% of their production and which have a point of sale:

a) Must declare the number of their retail stores and

b) Provide retail space in square feet, detailed address and Google pin location of all retail stores

c) Report sales volume and invoices per store per month, and monthly sales tax return.

READ MORE: Commercial importers under invoicing are destroying the industry

Earlier, the PBC also highlighted the practice of commercial importers abusing tax registration to avail lower rates.

Considering that most commercial importers have abused the lower tax rate normally available to manufacturers, FBR has therefore reduced the import stage tax rate to 1%/2%/5 .5% [on the basis of HS codes] for manufacturers as well as commercial importers.

READ MORE: Suggested RBF Database Exploration for New Taxpayers

However, instead of establishing an at par tax rate for commercial importers and manufacturers, PBC recommends implementing system-based controls to track commercial importers involved in under-invoicing and under-importing. the cover of a registration as manufacturers.

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