It is important for a business to ensure that its operations in Pakistan do not breach the sales tax laws. The FBR maintains records of black-listed taxpayers who are thus not eligible to do business. Deals with such a taxpayer will pose legal problems besides monetary loss. This updated guide explains the procedure to verify if a particular taxpayer is blacklisted under the sales tax act so that better decisions can be made in business transactions.

Understanding Blacklisted Taxpayers

Taxpayers who have suspended or canceled sales tax registrations by the FBR for reasons of tax evasion, fake invoicing, and other fraud activities are called blacklisted taxpayers. They shall not be allowed to conduct their businesses and shall be debarred from availing certain tax benefits due to blacklisting.

Reasons for Blacklisting

The FBR may blacklist a taxpayer for, among other things:

• Non-Filing of Sales Tax Returns: Failure to file for six consecutive months puts a business on a black list.
• Unusual Tax Profiles: Frequent input tax adjustments, continuous carry-forwards, or sudden jumps in turnover.
• Transactions with Blacklisted Persons: Making major purchases from or supplies to other blacklisted or suspended persons.
• Nonavailability at Registered Address: If the registered person cannot be found at the mentioned address or refuses to allow entry in the business premises.

How to Check for Blacklisted Taxpayers

To avoid engaging with blacklisted entities, you can verify a taxpayer’s status through the following methods:

1.   FBR Online Verification Portal

The FBR has an online verification system that allows you to check the status of taxpayers:

• Access the Portal: You can access the FBR’s Online Verification System.
• Scroll down to the “Online Verifications” section and click on “Blacklisted Taxpayer List (Sales Tax).”
• Enter Information: Select to verify through CNIC or NTN, input the corresponding number, and fill out the CAPTCHA.
• View Result: The software will show if the taxpayer is blacklisted or not.

2.   Active Taxpayer List (Sales Tax)

The FBR has an Active Taxpayer List that contains all active sales tax filers. Those who are not on the list are put on suspension or blacklist.

• Check Status: Verify whether a taxpayer is active through the online portal.
• Download ATL: You can download the current Active Taxpayer List from the FBR website.

3.   Tax Asaan Mobile Application

The FBR’s Tax Asaan application provides verification services:

• Download the app: You can find it on Google Play Store.
• Use Verification Services: Go to the “Online Verification System” and click the right option to verify a taxpayer’s status.

Consequences of Dealing with Blacklisted Taxpayers

Engaging with blacklisted entities may have severe implications:

• It bars your input tax claims if the transactions are conducted with blacklisted taxpayers.
• You risk facing fines and litigation for dealings with non-compliant entities.
• Your business reputation might be affected through associations with fraudulent parties.

Steps to Ensure Compliance

To protect your business

• Verify tax status regularly. Before entering any transaction, verify the status using the tools available from FBR.
• Keep yourself updated on the FBR’s Active Taxpayer List and others on your tax paying status.
• Use Tax Professionals: Engage tax consultants to help go through complex compliance requirements smoothly.

Rectifying Blacklisted Status

If a taxpayer is blacklisted, then the individual may be able to recover their status.

• File all past-due sales tax returns with any applicable penalties.
• Respond to FBR Notices: Address any notices promptly and provide necessary clarifications.
• Regularize financial records: All transactions should be transparent and comply with tax regulations.

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Conclusion

Maintaining sales tax compliance is very important to run your business flawlessly. FBR can help you identify blacklisted taxpayers, which you might otherwise engage with that might lead you to pitfalls. It will keep your business from legal and financial risk by informing you and conducting proper due diligence.