Supply of goods/services to government departments: only registered suppliers to be eligible

The Federal Board of Revenue (FBR) has decided that only registered suppliers, who are active taxpayers in FBR database and their names are in the Active Taxpayer List (ATL), would be eligible to supply goods/services to the government departments.
Sources told Business Recorder here on Thursday that the FBR will notify the decision following approval of Finance Minister Ishaq Dar. The FBR will not allow registered suppliers to supply goods/services to government departments in cases where the names of the suppliers are not in the Active Taxpayer List. Even though the supplier is registered with the sales tax department having Sales Tax Registration Numbers (STRNs) and his name is not appearing in the ATL, he would not be allowed to make supplies to government departments.
According to the sources, as agreed with the donor agencies, the FBR has to issue instructions to all government departments to make purchases from only registered suppliers who are also on ATL of Income Tax and Sales Tax wherever applicable.
Besides, it has been observed that to get purchase order from the government departments a large number of suppliers obtain sales tax registration but they do not comply with other legal requirements such as filing of returns, payment of due tax etc thus causing huge loss of revenue to national kitty.
It is pertinent to highlight that as per policy of the government the FBR is committed to broaden the tax base and improve tax compliance. To achieve this end, two major changes are required in procurement and payment procedure of the government departments.
Firstly, a condition may be inserted in the tender notice that only registered suppliers who are active taxpayers in FBR database (ATL) are eligible to supply goods/services to government departments.
Secondly, the payment to the registered persons may be linked to the active taxpayer status of the suppliers as per the FBR database. If any registered supplier is not on Active Taxpayers list his payment should be stopped till he files his mandatory tax returns and appear on ATL of FBR.
The proposed measures, apart from checking the tax default, would safeguard the government revenue and result in better tax compliance culture in Pakistan.