FBR proposes suspension of ST registration for flight invoices

(PKRevenue.com) – The Federal Board of Revenue (FBR) has proposed a major measure to combat tax evasion by proposing suspension of Value Added Tax (ST) registration for individuals and companies issuing airline invoices.

Sources within the FBR on Monday revealed that tax managers have recommended several proposals for the upcoming budget 2024-25. A key proposal is the suspension of VAT registration for those involved in issuing flying invoices. This move is aimed at streamlining the regulatory framework and curbing the widespread practice of preparing fraudulent tax documents.

Under the current Sales Tax Act, 1990, the registration of individuals or companies issuing fake invoices can be suspended. However, the FBR is now advocating for the inclusion of “flying invoices” under this provision to give tax authorities broader powers to suspend sales tax registration. Flying invoices are invoices issued without any actual sales transactions and are often used to claim unjustified tax credits or refunds.

By expanding the scope of the law, the FBR aims to improve its ability to identify and punish those who engage in these fraudulent practices. Issuing flying bills not only results in significant revenue losses for the government but also undermines the integrity of the tax system.

An FBR official said, “The proposed amendment is critical to strengthen our efforts against tax fraud. By combating flying bills, we can better enforce compliance and protect the tax base.”

The introduction of this measure is part of a broader strategy by the FBR to increase tax compliance and boost tax revenues. In recent years, the FBR has intensified its efforts to detect and prevent tax evasion through various initiatives, including digital monitoring and enhanced audit mechanisms.

The proposal to suspend VAT registration for airline invoices is expected to be included in the upcoming budget announcement and if implemented, it would be an important step in strengthening the FBR’s commitment to transparency and accountability in tax administration.

Reactions to the proposed measure from business stakeholders have been mixed. While some welcome the move as a necessary step to ensure fair competition and compliance, others are concerned about the potential for overreach and the impact on legitimate businesses that are inadvertently caught in the regulatory net.

As the FBR prepares to present its budget proposals, the inclusion of stringent measures against flying bills underscores its determination to tackle tax fraud head-on and ensure Pakistan’s financial health.