Karachi, October 13, 2024 – The Federal Board of Revenue (FBR) has shifted its focus toward holding Chief Financial Officers (CFOs) accountable for ensuring the authenticity of sales tax returns. The decision comes after the FBR admitted its failure to eliminate the rampant use of fake and flying invoices, a problem that has contributed to a staggering tax gap of Rs 3.4 trillion. In an internal note circulating across FBR’s field formations, Chairman Rashid Mehmood has explicitly warned CFOs to ensure the approval of only genuine invoices in their monthly tax filings. He made it clear that the FBR will not hesitate to initiate criminal proceedings against CFOs who sign off on fraudulent sales tax returns, stating: “We will initiate criminal proceedings against the CFOs of companies involved in signing the approval of fraudulent sales tax returns.” Under the new guidelines, CFOs are now required to submit affidavits confirming the accuracy of their companies’ sales tax filings. These affidavits will affirm that: • The declared turnover and value of supply have been accurately reported. • No fake or flying invoices have been included by immediate vendors or other entities in the supply chain. • All invoices correspond to taxable supplies, as listed in the required annexures. • No fictitious figures have been entered into any part of the return or its annexures. The CFO declaration also includes: “I … confirm that I am fully cognizant of the severe legal consequences, including but not limited to arrest under Section 37 of the Sales Tax Act, 1990, and imprisonment for up to 10 years.” This warning underscores the seriousness of the FBR’s crackdown on fraudulent practices. The FBR has provided a sample affidavit to guide CFOs on the required submission, which must be filed in hard copy. This move follows revelations of widespread misuse of flying invoices—fake invoices used to claim illegitimate input tax adjustments—by…