FBR to E-Monitor Tobacco Industry to Close Tax Loopholes Costing Rs. 40 Billion a Year

The Federal Board of Revenue (FBR) has decided to enhance the monitoring of tobacco products owing to multi-billion rupees tax evasion.

The board is finalizing applications from various IT firms for efficiently monitoring cigarette production in the country.

The licensee will be responsible for an end-to-end track and trace system connecting the manufacturing sites and import stations to the FBR’s monitoring system.


ALSO READ

FBR’s Updated Tax Asaan App Now Allows Registration & Non-Salaried Returns


The process involves the provision of stamps and integrated codes on each cigarette pack to ensure real-time electronic monitoring of the supply chain. The contractors will be paid a certain amount per 1000 stamps.

This way, the revenue watchdog will keep track of all tobacco-related imports, manufacturing, and sales of the multinational companies that reportedly cost billions of rupees to the national exchequer through under-invoicing.

As per details, the lowest bidding company, National Radio Telecommunication Corporation (NRTC), made a costly error in its bidding price while the second and fourth bidders made conditional biddings. None of these are being considered for the license.


ALSO READ

FBR Gets a Separate Category in Citizen’s Portal


FBR’s evaluation report says:

Apparently, the lowest bidder has violated annex six of the Invitation for Licence (IFL) and if the bidder does not agree to Rs. 0.731 at thousand stamps, the next lowest responsive bidder, NIFT, may be offered the license.

According to the report, if the company doesn’t agree on Rs. 0731 per 1000 stamps, they might lose the contract.

Despite massive tax evasion, the tobacco sector remains among the highest contributors in revenue generation, paying over 145 billion rupees in FED and Sales tax.

However, the illicit trade of tobacco products, smuggling of foreign brands, and undeclared local production cost Pakistan more than Rs. 20 billion a year.


  • Pakistan has already missed the International Monetary Fund’s (IMF) deadline to issue licences for the track-and-trace system for cigarettes by the end of September 2019. The government will now have to seek relaxation from the IMF as September-end was the structural benchmark under the $6-billion loan programme.


  • >