Who is Required to Register for Sales Tax in Pakistan

Sales tax is a significant revenue stream for Pakistan’s government; businesses and individuals need to understand their obligations and register for sales tax promptly. This article will cover all the businesses and individuals who are required to register for sales tax.

The Federal Board of Revenue (FBR) is responsible for the administration of sales tax in Pakistan and has set out clear guidelines for who is required to register for sales tax.

All Importers: All individuals or businesses that import goods into Pakistan must register for sales tax. This includes both commercial and non-commercial imports. Importers must register with the FBR and obtain a sales tax registration number (STRN) before they can import goods into the country.

Wholesalers (including dealers) and Distributors: Wholesalers and distributors of goods in Pakistan are also required to register for sales tax. This includes manufacturers and traders who supply goods to retailers and other businesses. Wholesalers and distributors are required to register with the FBR and obtain an STRN.

Manufacturers: Manufacturers of goods in Pakistan are also required to register for sales tax. However, manufacturers that meet the criteria for being considered a cottage industry (i.e. annual turnover from taxable supplies made in any tax period during the last twelve months ending any tax period does not exceed [ten] million rupees or whose annual utility (electricity, gas and telephone) bills during the last twelve months ending any tax period do not exceed [eight] hundred thousand rupees) are exempt from registering for sales tax.

Retailers: Retailers of goods in Pakistan are also required to register for sales tax. This includes both brick-and-mortar and online retailers meeting certain conditions

Tier-1 retailers, including those

operating as a unit of a national or international chain of stores,

operating in an air-conditioned shopping mall, plaza or center,

whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand, and

wholesaler-cum-retailers engaged in bulk import and supply of consumer goods on a wholesale basis to the retailers as well as on retail basis to the general body of the consumers, are also required to register for sales tax.

Service providers: Certain service providers, such as hotels, clubs, caterers, customs agents, ship chandlers, stevedores, and courier services, are required to register for sales tax as well. This is because they collect or pay tax as if it were a levy of sales tax.

Persons making zero-rated supplies: Individuals or businesses making zero-rated supplies, including commercial exporters who intend to obtain sales tax refund against their zero-rated supplies, are also required to register for sales tax.

Compulsory registration: A person who is required to be registered by virtue of the above criteria, but still avoids registration, can be compulsorily registered by the department, after proper enquiry, under sub-rule 1 of Rule 6 of Sales Tax Rules, 2006.

It is important to note that failure to register for sales tax can result in penalties and fines. Therefore, businesses and individuals must understand their obligations and register for sales tax on time.

For assistance with sales tax registration and compliance, we recommend Taxpage, a reputable tax consultancy firm that provides tax services throughout Pakistan. Taxpage has a team of experienced tax professionals who can help businesses and individuals navigate the complex sales tax registration and compliance process.