The Federal Board of Revenue (FBR) has decided to capture the supply chain data and other business deals of unregistered wholesalers, distributors, manufacturers, and importers to bring them into the tax net, following its campaign of installing the Point of Sale (POS) system at outlets of big retailers.
FBR, after integrating around 1,150 retailers with the POS system, has formulated 13 different Terms of Reference (TORs) of the “Sub-Committee on Integration of Businesses” in the country.
The mandate of the sub-committee will be to identify wholesalers, distributors, small, medium, and large manufacturers, and importers who potentially have taxable income but have neither been brought into the tax base nor are they part of the tax base, rather they are evading and suppressing taxes and invoices.
The sub-committee will also define the potential target market and quantify its size. It will also develop a business plan consisting of the budget and the project plan and the human, IT, and infrastructure resources required to bring the potential target market into the tax base to generate incremental tax revenue.
The body will also obtain legal and regulatory protection, facilitation, and support of stakeholders to achieve the objective with the support of FBR.
Furthermore, it will define policy and rules for a licensing framework for the appointment of intermediaries who will coordinate and facilitate the integration of the supply chain to capture and report all sales transactions.
In addition, the sub-committee will coordinate with various associations and trade bodies to facilitate the integration of supply chains. It will also control, monitor, and implement the supply chain capture integration program. It will also develop a correlation between invoice and e-payments for audit in coordination with necessary stakeholders including but not limited to the State Bank of Pakistan.
According to the TORs, the body will leverage software to capture the entire supply chain from manufacturing, distributor, wholesaler, retailer, and customers to capture transactions, WHT information and use the developed database to capture potential taxpayers.
The body will also leverage data analytics to capture sales tax demand on the input and output at each stage of the supply chain from manufacturing to end consumer, thereby bringing unregistered distributors and retailers into the tax net.
Besides, it will also develop the organizational structure required to deliver on the above TORs based on the size of the potential target market, physical dispersion of the potential target market, and the committed timeline for achieving TORs. Develop the costs associated with recruitment, third-party agreements, or consultancy arrangements required to acquire the desired human resource.
The committee will be authorized to determine the infrastructure in terms of premises, furniture, equipment, rent, lease, renovation, internal layout-related costs. It will also determine IT-related resources required in terms of hardware, software, bandwidth, storage along with financial cost and timelines of delivery.