The Federal Board of Revenue (FBR) has withdrawn its requirement that chief financial officers (CFOs) and authorized representatives file affidavits affirming the accuracy of sales tax returns for the September 2024 tax period.

The affidavits were initially introduced to ensure compliance and diligence during return filing. Still, the decision to retract the condition came following strong objections from trade bodies, including the Federation of Pakistan Chambers of Commerce & Industry (FPCCI). The FBR had earlier mandated the affidavit after a data-driven analysis revealed widespread fraudulent practices in several companies’ submission of sales tax returns.

Significant discrepancies were identified in sectoral and sub-sectoral analyses, which the FBR attributed to a lack of due diligence by CFOs and authorized representatives. The affidavit aimed to sensitize these individuals to their legal responsibilities under the Sales Tax Act, 1990, and to remind them of the potential criminal liabilities for submitting falsified returns.

However, several trade bodies argued that the affidavit requirement was causing undue hardship for businesses. In response to these concerns, the FBR announced that the filing of the affidavit will not be required for the September 2024 returns, due in October 2024.

The Board also invited stakeholders to submit alternative proposals by October 31, 2024, to address the issue of fraudulent sales tax returns. The FBR reiterated that while the affidavit condition is temporarily lifted, businesses must remain aware that filing false returns, including declaring fake invoices and underreporting sales, is a serious offense under section 33 of the Sales Tax Act, 1990.

The Board warned companies to exercise extreme caution to avoid legal and financial consequences. The FBR may revise the affidavit requirements in the future based on the concerns raised by stakeholders.