FBR Clarifies Value of Supply Definitions for Enhanced Sales Tax Transparency

• FBR clarifies value of supply for sales tax calculations for tax year 2025
• New definitions and parameters aim for uniformity and transparency in tax collection
• Value of taxable supply includes monetary consideration plus federal and provincial duties, excluding sales tax
• Consideration in kind valued at open market price
• Associated persons transactions valued at open market price if below market value or no consideration
• Installment supplies with markup valued at open market price
• Trade discounts valid if documented and align with business practices
• Special transactions use open market price as benchmark
• Imported goods valuation based on Customs Act, including duties and federal excise tax
• Suspected undervaluation addressed by Valuation Committee
• Manufacturing services valued by consideration received for value addition
• Retail tax excluded from value, reflects supplier price at time of supply
• Electric power and gas supply valued by purchase price, excluding other charges
• Used vehicles valued by difference between sale and purchase price for dealers
• FBR can fix values via Official Gazette notifications for specific goods or classes
• Updates aim to enhance compliance, reduce disputes, and clarify tax framework for businesses and taxpayers
• Government shows commitment to streamlined and transparent tax processes

Source: pkrevenue.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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