New Tax Policy in Pakistan as FBR mulls revised invoice recording mechanism

ISLAMABAD – Federal Board of Revenue (FBR) proposed restructuring of the sales tax invoicing and recording system, including the introduction of a new mechanism termed the “Advance Receipt Invoice”, as part of broader amendments to the Sales Tax Act 1990. The proposals were discussed during a meeting of the Senate Finance Committee, where officials outlined multiple reforms aimed at strengthening tax compliance, expanding documentation, and improving monitoring of production and sales. Committee Chairman Saleem Mandviwalla questioned the rationale behind the advance receipt invoice system, noting that tax collection already occurs at source. In response, FBR officials said the new framework is intended to modernize invoicing procedures and enhance traceability within the sales tax regime. Officials confirmed plans to incorporate the legal definition of the National Faceless Center into the Sales Tax Act, alongside the introduction of a Production Monitoring System designed to track production and sales activities more closely. Another key proposal includes bringing retailers with an annual turnover exceeding Rs 20 crore into the revised tax framework. The threshold drew discussion in the committee, with Mandviwalla suggesting it should be reduced further. Minister of State for Finance Bilal Azhar Kayani said businesses falling within the Rs 20 crore turnover bracket would be required to pay Rs 25,000, after which they would be issued an FBR Green Plate. He said the facility would act as an incentive mechanism, ensuring that compliant businesses are not subject to undue interference from tax officials. He added that businesses opting out of the scheme would be placed under the normal tax regime, while those avoiding both frameworks would face penalties. According to him, the policy differentiates between large and small retailers to encourage broader compliance. FBR officials further informed the committee that there are approximately 3.7 million commercial met