The Federal Board of Revenue (FBR) has introduced a new system aimed at documenting withholding tax (WHT) transactions in real-time, ensuring the timely deduction and transfer of WHT by withholding agents.
Through the issuance of the final SWAPS rules via S.R.O. 419(I)2024 on Thursday, the FBR has directed withholding agents, termed as “SWAPS Agent,” to install and integrate fiscal electronic devices and software for conducting transactions liable to withholding tax.
Under these new regulations, notified SWAPS agents are mandated to fulfill specific requirements and obligations as prescribed in the rules. SWAPS, which stands for the FBR’s web-based portal or any computerized system of the notified SWAPS Agents integrated with the Board, is designated for processing payments for goods and services.
Effective from the date to be notified by the Board, SWAPS Agents are prohibited from conducting any specified transactions unless the CNIC, NTN, and IBAN of the withholdee correspond to the same title.
Furthermore, the SWAPS Payment Receipt (SPR) serves as the sole evidence of tax collection or deduction, facilitating the process of claiming refunds or tax credits. In cases where a SWAPS Agent encounters delays in registration or integration, an extension may be requested from the Commissioner Inland Revenue through IRIS, providing reasons for the delay.
FBR has underscored that any SWAPS Agent found in violation of the provisions outlined in this chapter will be subject to penal provisions as prescribed under the Income Tax Ordinance, 2001.
The implementation of this real-time WHT documentation system signifies FBR’s commitment to enhancing transparency and efficiency in tax administration, ensuring compliance with tax regulations, and facilitating seamless tax transactions for businesses and individuals alike.