PTBP Web Desk
The Federal Board of Revenue (FBR) has officially drawn a hard line for sales tax-registered businesses across Pakistan. From September 1, 2025, all importers, public companies, and firms with an annual turnover exceeding Rs1 billion must integrate their invoicing systems with FBR’s electronic platform. Failure to comply will trigger strict penal actions starting with a fine of Rs500,000 under Section 25A of the Sales Tax Act, 1990.
After years of gradual extensions and leniency, the tax authority has signaled that no further relaxations will be offered. This measure marks a decisive step in FBR’s ongoing efforts to promote digital tax compliance, curb tax fraud, and eliminate flying invoices.
From September 1, FBR’s field formations are legally empowered to issue a first penalty notice of Rs500,000 to every registered person who has not completed the integration. The consequences, however, will not stop there.
The penalty amounts will increase progressively with repeated defaults:
- Second notice: Rs1,000,000
- Third notice: Rs2,000,000
- Fourth and beyond: Rs3,000,000
These escalating penalties are intended to ensure that large businesses, which have the resources to comply, do not delay electronic invoicing any further.
Experts warn that from September 1, 2025, any sales tax invoice issued outside the FBR’s electronic system will be considered illegal. This means:
- Buyers will not be able to claim input tax adjustments against such invoices.
- Non-compliant businesses may lose credibility with customers and suppliers.
- Businesses could face potential audits and further scrutiny from tax authorities.
This is particularly relevant for importers, listed companies, and high-turnover firms. FBR has already issued SRO 1413(I)/2025, which requires these categories to generate digital invoices with an FBR invoice number, QR code, and FBR logo.
According to tax experts, public companies and large firms with turnovers above Rs1 billion are already well-positioned to integrate with the system. These companies typically have advanced accounting software and IT resources, making integration easier compared to smaller players.
Therefore, FBR’s decision to take immediate penal action against them is seen as justified. Experts argue that delaying enforcement for big companies could undermine the credibility of the entire electronic invoicing regime.
While the larger firms are equipped for compliance, small, medium, and seasonal importers face greater challenges. Many of these businesses lack access to advanced technology, specialized accounting staff, or the financial resources to make quick system upgrades.
Industry stakeholders have urged FBR to recognize these constraints. They suggest that targeted relief be given to smaller businesses, especially in light of recent flooding across Pakistan, which has disrupted supply chains and business operations.
Given the severe flooding in different regions, tax experts have recommended that FBR consider a general extension of the deadline, at least for importers. They argue that forcing compliance in such difficult circumstances could lead to unintended consequences, such as business closures or widespread disputes.
At the same time, experts stress that compliant taxpayers should not delay any further. They advise all businesses to proactively integrate their invoicing systems without waiting for another extension, as the FBR appears determined to implement its electronic invoicing mandate this time.
The broader goal of FBR’s electronic invoicing system is to curb fraudulent tax practices. “Flying invoices”—fake or duplicate invoices used to evade taxes—have long been a problem in Pakistan’s tax system. By mandating a QR-coded, centrally verified invoice system, the FBR aims to bring greater transparency and accountability.
This move aligns with global best practices where digital tax systems have successfully reduced fraud and boosted revenue collection. Countries such as Turkey, China, and Brazil have already implemented similar regimes with measurable success.
While the September 1 deadline sets a tough challenge for many businesses, compliance is ultimately unavoidable. The legal, financial, and reputational risks of ignoring the new system are far greater than the costs of integration.
Businesses are now left with two options:
- Integrate immediately and start issuing electronic invoices in compliance with FBR’s requirements.
- Risk hefty penalties, invalid invoices, and input tax denial, which could affect profitability and relationships with buyers.
Tax experts caution that the era of paper invoices for large firms and importers is effectively over. With FBR empowered to act swiftly, companies that fail to adapt will be left behind.
