Registration with the National Revenue Board (NBR) has been made mandatory for startup companies seeking to avail of Startup Sandbox facilities.
If the NBR fails to decide on a registration application within 60 days of receipt, the application will automatically be deemed approved.
However, the authority reserves the right to cancel registrations if false information is provided or if access to digital systems is obstructed.
The NBR disclosed this information on Thursday (October 29). The provisions were clarified in an order signed by NBR Chairman Ahsan Habib on Wednesday.
This directive was issued to ensure the proper application, effective implementation, and tax compliance of the "Startup Sandbox" provisions outlined in Part II of the Eighth Schedule of the Income Tax Act, 2023.
Under the guidelines, startups intending to access sandbox benefits must meet statutory conditions and register with the NBR by submitting an application addressed to the NBR Member (Tax Appeals and Exemptions).
Applications must be accompanied by:
- Certificate of Incorporation from the Registrar of Joint Stock Companies and Firms (RJSC)
- Memorandum of Association (MOA)
- Detailed description of the startup's operations
- A consent letter granting tax authorities read-only access to the startup’s ERP, accounting software, primary digital systems, or general ledgers
Upon reviewing the application, the NBR will issue a "Startup Sandbox Registration Certificate" within 60 days.
If no decision is communicated within this window, the application will automatically be considered approved.
The directive also outlines specific procedures for registration cancellation.
If a startup is found to have submitted incorrect information or restricted access to its digital systems, a show-cause notice will be issued, allowing the business 60 days to respond.
Additionally, the startup's representative must be given a reasonable hearing before any cancellation order is finalized.
Registration can only be canceled through a written order detailing valid grounds following the hearing.
Industry insiders note that the Startup Sandbox is a specialized regulatory and policy framework designed by the government for innovative ventures.
Its primary objective is to help early-stage businesses scale smoothly without facing immediate, heavy tax burdens and regulatory hurdles.