FBR requires exchange companies to report failed transactions

KARACHI: The Federal Board of Revenue (FBR) has made it mandatory for exchange companies to provide details of failed transactions to prevent misuse of the exchange regime.

In this regard, the Supreme Revenue Authority issued SRO 50(I)/2022 to require traders and companies to report failure to transfer sales or billing data to the FBR. The Revenue Authority has amended the Income Tax Rules 2002 to give legal cover to the changes. It amended rule 33G to insert forex traders and companies.

The Tax Administration provides on its website to a client of an integrated company the possibility of checking and ensuring that the invoice or invoice issued to him has been duly communicated to the computerized system of the FBR and in the event of non-verification, he can upload the image of the invoice or invoice to the portal.

Sources at the FBR indicated that the measure was taken to ensure currency transfers against invoices issued by legal or natural persons.

They said that due to misreporting of transactions, the country lost a huge amount of currency.

For the past year, the country has been facing exchange rate volatility. The local unit recorded a decline of Rs18.68, or 11.86%, since the close of June 30, 2021 at Rs157.54 against the dollar at Rs176.22 on January 19, 2022.

Previously, the State Bank of Pakistan (SBP) also took action to discourage purchases from foreign exchange companies.

It has been made mandatory for all foreign currency sales transactions equivalent to $500 or more. Exchange companies must keep copies of identity documents, ie the Computerized National Identity Card (CNIC); National Identity Card for Pakistanis Abroad (NICOP); Pakistani origin card (COP); and a passport bearing a valid visa or other proof of a foreigner’s legal stay in Pakistan after seeing the document in original.

In addition, the exchange companies would also perform biometric verification of Pakistani nationals for all such transactions and keep a record of them. Exchange companies will also obtain supporting documentation related to the subject matter, as declared by the customer, of FCY sale transactions, exceeding $1,000 or the equivalent in other currencies.