The 2012 worldwide VAT, GST and sales tax guide

P AKISTAN 495
Examples of items for which input tax is nondeductible
Purchases used for nonbusiness purposes
Business gifts
Business and staff entertainment
Purchase of vehicles
Refunds. If the amount of input tax in a sales tax period exceeds
the output tax in the same period, the excess credit is refundable.
In practice, refunds are generally available to persons that are
engaged in making zero-rated supplies.
G. Recovery of sales tax by nonestablished businesses
Pakistan does not refund sales tax incurred by foreign businesses
that are neither established nor registered for sales tax in Pakistan.
H. Invoicing
Sales tax invoices and credit notes. A taxable person must generally
provide a sales tax invoice or cash memo for all taxable supplies
made. A simplified tax invoice or cash memo is required for
retail sales.
A sales tax invoice is generally necessary to support a claim for
input tax credit.
A credit note may be used to reduce the sales tax charged and
reclaimed on a supply of goods or services if a valid adjustment
is made. The document must be clearly marked “credit note,”
must detail the reason for the adjustment, and must refer to the
original sales tax invoice for the supply.
Proof of exports. Exports of goods are zero-rated for sales tax.
However, to qualify as sales tax-free, export supplies must be
supported by evidence that the goods have left Pakistan. The
required evidence includes the following documents:
• A copy of the goods declaration for export authenticated by
customs
• Copy of house and master bill of lading and airway bill or railway
receipt
• The original invoices
• A stock or inventory statement
• Any other business records related to the exported goods
Foreign-currency invoices. If a sales tax invoice is issued in a
foreign currency, the amounts must be converted to Pakistani
rupees (PKR). The conversion must be calculated in accordance
with the open market exchange rate.
I. Sales tax returns and payment
Sales tax return. All taxable persons other than retailers must file
monthly returns. The return must be filed by the 18th day of the
month following the end of the return period. However, the payment
of tax must to be made by the 15th day of the month.
Retailers must file returns on a quarterly basis by the 15th day of
the month following the end of the quarter.
Sales tax withholding. Special rules have been prescribed with
respect to sales tax withholding. These rules apply to taxable