Retailers and distributors in Pakistan are taxed partly through what their suppliers collect from them and partly through what they report themselves. Larger retailers must also report every sale to FBR as it happens. The issues below are specific to this part of the chain.
The points where tax and accounting rules come into play are numbered.
Numbered points are explained below.
At: Source stock
Advance tax your suppliers collect can be set against your own tax, but only if it is recorded. Suppliers collect advance tax from distributors and wholesalers under section 236G and from retailers under section 236H, and it is adjustable when claimed in the return.
We record it from supplier invoices and claim it in your return.
At: Sell online or in store
A Tier-1 retailer that is not integrated risks penalties and, if it continues, sealed premises. Retailers who fall within the Sales Tax Act’s definition of a Tier-1 retailer must integrate their points of sale with FBR’s system so each invoice is reported in real time; failing to integrate can lead to penalties, a reduction in input tax and sealing of premises.
We check whether you fall within the definition and reconcile your POS data to your books.
At: Collect sales tax
Charging sales tax on the wrong value creates a shortfall on every sale. Some goods carry sales tax on their printed retail price rather than on the invoice value.
We identify which of your products are in that category.
POS data, supplier invoices and advance tax receipts must reconcile each month.
Advance tax paid to suppliers is claimed in the return, and sales tax returns must match POS records.
POS and sales tax notices need prompt, documented replies.
Distributors applying for bank finance are often asked for accountant-prepared or reviewed accounts.
Tier-1 is defined in the Sales Tax Act, 1990 by criteria such as being part of a chain, the size of the shop and electricity consumption. The criteria change with Finance Acts, so we check them against your business.
Yes, it is adjustable against your income tax, provided you have the supplier’s invoice showing the tax and you claim it in your return.