31 January 2025

Pakistan amends sales tax rules for implementation of electronic invoicing

  • Changes to the sales tax rules in Pakistan will affect how electronic invoices must be issued and how point-of-sale (POS) systems are integrated.
  • The amendments would require the notified persons, including multinational companies, to invest in technology and adapt their operations to ensure compliance with new electronic invoicing and POS integration requirements, which may lead to increased administrative burdens and costs.
 

The Pakistan Federal Board of Revenue (the Board) has issued SRO.69(I)/2025, dated 29 January 2025, introducing significant amendments to the Sales Tax Rules, 2006. These changes primarily focus on the issuance of electronic invoices and the integration of point-of-sale (POS) systems. The previous Chapters XIV (Special Procedure for Issuance of Electronic Invoices between Buyers and Sellers), XIV-AA (Online Integration of Tier-1 Retailers), and XIV-BB (Integration of Electronic Invoicing and Licensing) have been consolidated into a single Chapter XIV, now titled "Procedure for Licensing, Issuance of Electronic Sales Tax Invoices, and Integration of Registered Persons."

Key changes

Application and scope (Rule 150Q)

These rules apply to all registered persons for the electronic integration of hardware/software for the issuance of electronic invoices and POS integration. Through SRO.28(I)/2024, dated 10 January 2024, the Board had already notified various categories of persons required to integrate their systems for electronic invoicing. Persons who have already integrated their POS systems with the Board will be considered compliant under these new rules.

Obligations and requirements (Rule 150R)

Notified persons must register and integrate their electronic invoicing hardware and software; they are required to report information about all their outlets and points of sale or electronic invoicing machines to the Board. All supplies (both taxable and exempt) must be made exclusively through integrated systems. The rules outline the particulars to be included on invoices issued through the integrated system. The integrated system must perform the following functions:

  • Securely generate, store and transmit sales tax invoice data in the prescribed format
  • Include digital signatures and QR codes based on the unique invoice number assigned by the Board
  • Maintain logs of all transactions and adjustments, performing regular closing procedures
  • Send alert messages to the Board regarding any errors, malfunctions or inconsistencies
  • Automatically populate electronic invoices in sales tax returns
  • Install digital payment methods, including debit and credit card options, if required by the Board
  • Maintain video recordings of point-of-sale transactions for at least one month and submit them to tax authorities, upon request

Electronic invoice requirements (Rule 150S)

Real-time, verifiable electronic invoices are required to be issued for every taxable supply and service. It is important to note that while Rule 150R requires electronic invoices for both taxable and exempt items, Rule 150S specifies that this requirement applies only to taxable supplies and services. Debit and credit notes must also be issued electronically through the integrated system. Invoices (along with debit and credit notes) must be retained for six years.

Audit and compliance (Rules 150T to 150XD)

Integrated persons must provide access to their records for audits. The Board may issue instructions for technical audits. The concerned Commissioner may extend the integration deadline by a maximum of 60 days, during which integrated persons must issue paper invoices. Noncompliance with these rules may result in penalties and restrictions. Integrated persons are responsible for the functionality of their hardware and software; any disruptions must be reported to the concerned Commissioner within 24 hours, along with documentary evidence. Invoices issued by integrated persons can be verified through the Board's system. Invoices issued during periods of disruption (such as power or internet outages) must be clearly marked as offline and uploaded within 24 hours. Tax authorities may monitor system operations through periodic visits.

Licensing (Rules 150XE to 150XQ)

Only individuals granted a license under these rules are authorized to integrate registered persons. The Pakistan Revenue Automation Pvt. Limited (PRAL) has been designated as a licensed integrator, providing free services. Licensees may charge fees for integration services, subject to Board specifications. The requirements and procedures related to licensing have been moved from Chapter XIV-BB to Rules 150XE to 150XQ.

Implications

The amendments would require the notified persons, including multinational companies, to invest in technology and adapt their operations to ensure compliance with new electronic invoicing and POS integration requirements, which may lead to increased administrative burdens and costs.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

EY Ford Rhodes, Karachi

EY Ford Rhodes, Lahore & Islamabad

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-0376