Complexities: PCDMA concerned over issues faced by taxpayers

KARACHI: The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has expressed serious concern over the increasing challenges faced by taxpayers in filing their returns due to the complex structure of the newly introduced Annex H1 and Annex J, as well as, the technical difficulties related to Unit of Measure (UoM) requirements.

In a letter to the Chairman of the Federal Board of Revenue, Rashid Mehmood Langrial, PCDMA Chairman Salim Valimuhammad and Danish Saleem, Advisor to the Subcommittee for Sales and Income Tax, pointed out that the newly uploaded Annex H1 by the FBR was causing confusion and compliance issues due to unclear guidelines, frequent regulatory changes, and persistent portal glitches.

“Taxpayers are finding it increasingly difficult to reconcile withholding statements and comply with filing requirements due to the overly complex design of Annex H1,” said Salim Valimuhammad. “The situation is further aggravated by the form’s calculation mechanism, which mistakenly subtracts Sales Value instead of Cost Value.”

PCDMA Chairman emphasised to the FBR the need to allow taxpayers to voluntarily enter the Cost Value before submission of returns, to ensure accurate reporting and avoid erroneous assessments, delayed refunds, or penalties. “Taxpayers continue to face identical challenges with Annex J, especially when reconciling transactions under constantly fluctuating tax rates. Unclear guidelines combined with recurring portal malfunctions are imposing excessive compliance burdens - particularly on small businesses and individuals lacking professional tax assistance. Most critically, Annex J replicates Annex H1's fundamental error by deducting Sales Value rather than Cost Value, a systemic flaw that PCDMA confirms is causing rampant inaccuracies in tax filings across the board.”

Another major challenge reported by members is the technical complexity of the Unit of Measure (UoM) codes. The lack of clarity in categorizing goods and services, coupled with system glitches, is causing filing errors and unnecessary delays, especially for businesses involved in diverse inventories and import/ export operations.

PCDMA urged that such major changes should not be implemented without consulting key industry stakeholders. The association is urging the FBR to involve trade bodies and professionals in the decision-making process to ensure smoother implementation.

Salim Valimuhammad said “A collaborative approach will help reduce errors and build trust among the taxpayer community.”

Copyright Business Recorder, 2025