ISLAMABAD – Chairman Federal Board of Revenue (FBR), Rashid Mahmood Langrial, has revealed large-scale tax evasion in Pakistan’s tobacco and poultry sectors, amounting to nearly Rs400 billion annually.
This significant revenue gap, he explained, highlights the systemic weaknesses in tax enforcement and the need for stronger regulatory measures.
Speaking at a meeting of the National Assembly’s Standing Committee on Finance on Friday, Langrial disclosed that the tobacco industry alone is responsible for an estimated Rs300 billion in tax evasion each year. He stated that illegal cigarette sales remain rampant, and that only one out of every 10 trucks carrying smuggled or illicit cigarettes is intercepted by authorities. He attributed this low seizure rate to limited manpower and resources available to the FBR.
To address this, Langrial emphasized the importance of involving provincial law enforcement agencies, particularly at the retail level. The FBR plans to enhance enforcement by drafting new standard operating procedures (SOPs), allowing for improved coordination between the FBR and provincial forces. Any cigarette product sold without the mandatory tax stamp is considered illegal, and the FBR aims to increase the cost of non-compliance within the tobacco sector. Officials expect at least a 10 percent improvement in enforcement efficiency once the new measures are implemented.
In addition to the tobacco industry, Langrial also highlighted serious underreporting in the poultry sector. Despite having a tax liability of around Rs10 billion, the sector contributes only Rs1.3 billion annually. He attributed this gap to the lack of cost accounting in income tax filings, a loophole widely exploited by businesses in the poultry industry. The chairman explained how a chick priced at Rs70–80 is often sold for Rs180, reflecting high profit margins that are not accurately reported.
According to FBR estimates, the daily production of chicks in the poultry sector ranges from 800,000 to 900,000. Yet, due to poor documentation and intentional underreporting, the sector has evaded up to Rs150 billion over the last five years. Langrial stated that recent FBR audits forced some companies to revise their declared sales figures after discrepancies were discovered.
The FBR is now determined to plug revenue leakages in both the tobacco and poultry sectors through tighter regulation and inter-agency cooperation.