Islamabad, April 26, 2024 – Prime Minister Shehbaz Sharif has denounced the track and trace system implemented for monitoring goods in several key industries as a complete fraud.
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Subpar Quality of Tax Stamps Hinders Revenue Collection Goals of Track and Trace System
In a recent development, an inquiry committee appointed by former Prime Minister Shahbaz Sharif to oversee the implementation of the Track and Trace System (TTS) has unveiled critical shortcomings in the system’s effectiveness, particularly in four major sectors: sugar, cement, fertilizer, and tobacco.
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FBR makes tax stamps mandatory for fertilizer bags
ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday made tax stamps mandatory for packing and supply of fertilizer bags.
The FBR issued Sales Tax General Order (STGO) No. 15 of 2022 to implement track and trace system under SRO 250/2019 related to fertilizer bags.
The FBR said that the provisions of Section 40C (2) of the Sales Tax Act, 1990 read with Rule 150ZF of the Sales Tax Rules, 2006 mandate the revenue body to notify the date for the implementation of Electronic Monitoring of production and sales of goods in the manner prescribed in the law on all manufacturing sites of notified sectors.
READ MORE: FBR directed to bring entire sugar supply chain into tax net
The board further said in exercise of the powers conferred under Section 40C(2) of the Sales tax Act, 1990 and Rule 150ZF of the Sales Tax Rules, 2006 it is hereby notified that no fertilizer bag shall be allowed to be removed from a production site, factory premises or manufacturing plant or import station without affixation of tax stamps/Unique Identification Markings (UlMs) with effect from July 01, 2022, which are to be obtained/procured from FBR’s Licensee M/s. AJCL/MITAS/Authentix Consortium.
Under SRO 250/2019 it has been made mandatory for goods to be affixed with tax stamps, banderoles, stickers, labels, barcodes, etc.
READ MORE: IR officers’ bid to deny tax refund adjustment criticized
It said that every package, including a tin, container or bottle, of the specified goods whether manufactured or imported shall be affixed or printed a tax stamp, banderole, sticker, label, barcode etc.
Provided that in respect of such specified goods which are exempt or meant for export tax stamps shall not be required to be affixed thereon, but shall be clearly, legibly and indelibly marked as “Exempt Goods” or “For Export”, as the case may be.
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Digital tax monitoring yields Rs32.43bn from sugar sector
ISLAMABAD: The digital monitoring initiated by the Federal Board of Revenue (FBR) has resulted in a collection of Rs32.43 billion from the sugar sector during the first half of the current fiscal year.
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FBR announces cash reward to IREN officials for raids
KARACHI: Dr. Muhammad Ashfaq Ahmed, Chairman of the Federal Board of Revenue (FBR), has announced cash reward for officials of Inland Revenue Enforcement Network (IREN) for conducting successful raids against illegal sugar bags.
A statement issued on Saturday said that the Chairman had appreciated the performance of IREN squads and announced a cash reward for those officers, who conducted successful raids. He stated that the Track & Trace system coupled with IREN’s valiant drive would help overcome the menace of non-tax paid goods in the market.
It is pertinent to mention that the Prime Minister of Pakistan has recently launched a Track & Trace System on the Sugar Sector. Therefore, IREN has also been entrusted to ensure its enforcement in the entire supply chain of the Sugar Industry.
For this purpose, the Chief Coordinator IREN and his Regional Enforcement Squads across Pakistan are geared to conduct raids and ensure seizures on the non-tax paid sugar stocks, which move out of the factory premises/warehouses without tax stamps.
As a result, IREN Squads have intensified their operations in every nook and corner of the country, against the non-compliant supply chain operators dealing in the sugar sector in order to maximize revenue potential.
The Squads have raided various sugar dealers in almost all big cities and various small towns to check sugar stocks. During these raids Hyderabad Squad has seized stock of 172 sugar bags without affixing of Tax Stamps in the premises of M/s Gulzar & Co. The stock of 172 sugar bags was seized and legal action was being initiated against those who were found involved in the tax evasion.
Building on its momentum to maximize tax compliance, FBR IREN squads, has seized 8,320,000 illegal cigarettes worth Rs. 21,479,625 involving duties and taxes of Rs. 17,242,635 in the month of November, 2021. Likewise, in the first five months of FY- 2021-22, IREN has seized non duty / tax paid cigarettes of Rs. 177,959,737 (approximately 74,131,500 sticks) resulting in detection of evasion of duties and taxes worth Rs. 142,905,265.
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FBR tightens condition for tax stamped sugar bags
In a bid to enhance transparency, combat tax evasion, and ensure compliance with legal requirements, the Federal Board of Revenue (FBR) has reinforced the obligation of mandatory tax stamps on all sugar bags.
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PM Imran launches tax monitoring ‘track, trace’ system
ISLAMABAD: Prime Minister Imran Khan on Tuesday launched the online monitoring of supply and production of various items in order to plug revenue leakages.
Taxes vital for country’s economic stability and survival, the prime minister hoped and said that the use of technology will help check tax-pilferage and take revenue collection to the tune of Rs 8000 billion per annum.
“Our biggest issue is that we have to take loans to run the country. Countries cannot be run without taxes. We have our stability at stake,” the prime minister added.
The Federal Board of Revenue (FBR) has introduced the first-ever track and trace system in the country.
The prime minister congratulated the Advisor of Finance Shaukat Tarin, FBR, and other relevant institutions for introducing the technology-based system for which the efforts were being done since 2008.
The Prime Minister said that the introduction of the track and trace system was a big and positive achievement, which will have a far-reaching impact.
According to details, the FBR’s track and trace system will ensure electronic monitoring of the production and sale of important sectors like tobacco, fertilizer, sugar, and cement.
With the electronic monitoring of goods’ movement from production to the use of consumers, the track and trace system besides increasing the country’s revenue will also help ensure transparency and check the pilferage of taxes.
After the implementation of the track and trace system in the tobacco sector, the FBR was now going to introduce this system in the sugar sector, which will follow the implementation of electric monitoring of other sectors as well.
Under the new system, no sugar bag can be taken out from the production site, factory or manufacturing plant without a stamp and individual identity mark. The FBR was also planning to implement the new system in the beverages and petroleum sectors.
The Prime Minister said that with a reasonable tax-to-GDP ratio in the West and highest in Scandinavian countries, Pakistan could not promote the tax culture due to different reasons including the aristocratic lifestyle of the ruling elite in the past, which shattered the confidence of taxpayers in governments.
The practice of not paying due taxes was continuing since the colonial era, when people used to think that their hard-earned money was being taken out by the foreign rulers and they were not being provided basic facilities, he remarked.
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Sugar mills agree to implement track, trace system
KARACHI: The sugar mills have agreed to allow the tax authorities to monitor the production and supply through track and trace system.
In this regard a tri-partite agreement was signed at Large Taxpayers Office (LTO), Karachi. The agreement was signed by the representatives of sugar mills, Federal Board of Revenue (FBR) and the consortium AJCL/ Mittas/ Authentix for the implementation of Track & Trace System (TTS).
Shahid Iqbal Baloch, the Chief Commissioner, LTO, welcomed the representatives and oversaw the signing ceremony.
Speaking on the occasion, the Chief Commissioner highlighted the importance of the TTS.
He believed that launching of the TTS will be a great stride towards accelerating digitisation of economic activity, improving revenue forecasting and curbing counterfeit products in the market.
The Track and Trace Solution is to be rolled out in a multi-phasic manner across the Tobacco, Cement, Sugar and Fertilizer Sectors in Pakistan with a view to enhancing tax revenue, reducing counterfeiting and preventing the smuggling of illicit goods through the implementation of a robust, nationwide, electronic monitoring system of production volumes and by the affixation of more than 5 billion tax stamps on various products at the production stage, which will enable FBR to track the goods throughout the supply chain.
Tariq Hussain Shaikh, the Project Director, (Track & Trace System), FBR reiterated the importance of the project and called it a game changer for improving revenue and curbing counterfeit products in the market.
The meeting concluded with the handing over of the agreements by the Chief Commissioner to the representatives on behalf of FBR.
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Only FBR registered cigarette brands to be sold in Pakistan: Member IR Operation
ISLAMABAD: Dr. Muhammad Ashfaq Ahmed, Member (Inland Revenue Operations) has said that authorities were in process of drafting new rules where-under cigarette brands registered with FBR could only be sold in Pakistani markets.
He said during his visit to Regional Tax Office (RTO) Rawalpindi on Friday where the tax office had seized two trucks which were illegally transporting non-tax paid counterfeit cigarettes for supply into local market.
The Member said that from July 1, 2021, Track & Trace System would be rolled out to cover tobacco manufacturing across the country, and that AJK Government had approached Federal Board of Revenue to extend the scope of Track & Track System to cigarette manufacturing units located inside AJK territory.
It is expected that over the next few months implementation of Track & Trace System and its extension into AJK, coupled with IREN’s valiant drive would help overcome the menace of counterfeit, illicit and non-tax paid cigarettes in the market.
Dr. Muhammad Ashfaq Ahmed appreciated Dr. Khalid Mahmood Lodhi, Chief Commissioner, RTO, Rawalpindi and his enforcement drive to curb movement of illicit cigarettes on the roads. He also announced special reward for the members of the raiding squad and encouraged them to continue working with full commitment and integrity.
According to details the trucks were loaded with 300 cartons of counterfeit cigarettes of Classic Brand, and 300 cartons of counterfeit cigarettes of Kissan Brand containing 6 million cigarette sticks. Market value of the seized cigarettes comes to Rs. 18,900,000/- involving unpaid duties and taxes at Rs. 12,646,500/-. Some of the counterfeit cigarette brands are manufactured in AJK, and then transported across into Pakistani markets without payment of duty and taxes.
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FBR to reintroduce track and trace system for tobacco products by end-June
KARACHI: Federal Board of Revenue (FBR) may reintroduce track and trace system for tobacco products by end-June 2021 with a new strategy after a higher court declared the earlier system invalid.
According to country report on Pakistan issued by the International Monetary Fund (IMF) on Thursday, the Pakistan authorities through Letter of Intent (LOI) pledged to reintroduce the track and trace system by end-June 2021.
“The procurement procedures related to the track-and-trace licenses to address the smuggling of tobacco products have been declared invalid by the Islamabad High Court (IHC) and the roll-out of the track-and-trace system for tobacco products was suspended,” according to the report.
Nonetheless, and building on the lessons from this experience, the authorities are seeking to reintroduce and roll out the track-and-trace systems for tobacco products by end-June 2021 and will consider its introduction for other items subject to high levels of smuggling, including sugar, drinks, and cement, it added.
The authorities said that that for tax policy measures to be successful and to generate the expected revenues, we need to step up tax administration reforms and enforcement. To this end, we will focus on:
(i) introducing a centralized, risk-based compliance function;
(ii) modernizing the IT system and further advancing automation;
(iii) actively using third-party data, strengthening data cross-checking, and analysis;
(iv) simplifying registration and filing processes;
(v) modernizing audit practices and taking a more targeted audit approach; and
(vi) further strengthening the large taxpayer approach and expanding the activities of the Large Taxpayer Office (LTO).
Additionally, the authorities will continue the process of sales tax harmonization, implement the single return and taxpayer portal by end-June 2021, and launch a Collectible Debt Campaign by end-March 2021 to redress the high percentage of outstanding debt.
To support GST harmonization, the authorities will establish the single filing portal by September 2024.