AVN 67.90 Decreased By ▼ -0.58 (-0.85%)
BAFL 31.23 Increased By ▲ 0.23 (0.74%)
BOP 4.90 Decreased By ▼ -0.01 (-0.2%)
CNERGY 3.79 Increased By ▲ 0.04 (1.07%)
DFML 14.20 Decreased By ▼ -0.03 (-0.21%)
DGKC 41.25 Decreased By ▼ -0.39 (-0.94%)
EPCL 47.60 Increased By ▲ 2.23 (4.92%)
FCCL 11.55 Decreased By ▼ -0.16 (-1.37%)
FFL 5.08 Decreased By ▼ -0.02 (-0.39%)
FLYNG 5.83 Decreased By ▼ -0.02 (-0.34%)
GGL 10.70 Increased By ▲ 0.29 (2.79%)
HUBC 68.75 Increased By ▲ 0.25 (0.36%)
HUMNL 5.75 No Change ▼ 0.00 (0%)
KAPCO 28.18 Decreased By ▼ -0.04 (-0.14%)
KEL 2.28 Increased By ▲ 0.02 (0.88%)
LOTCHEM 26.89 Increased By ▲ 1.79 (7.13%)
MLCF 21.36 Decreased By ▼ -0.22 (-1.02%)
NETSOL 87.49 Decreased By ▼ -0.86 (-0.97%)
OGDC 99.34 Increased By ▲ 0.04 (0.04%)
PAEL 11.08 Decreased By ▼ -0.03 (-0.27%)
PIBTL 4.26 Increased By ▲ 0.03 (0.71%)
PPL 80.31 Decreased By ▼ -2.14 (-2.6%)
PRL 13.49 Increased By ▲ 0.15 (1.12%)
SILK 0.92 Increased By ▲ 0.02 (2.22%)
SNGP 43.62 Decreased By ▼ -0.76 (-1.71%)
TELE 6.20 Increased By ▲ 0.02 (0.32%)
TPLP 15.87 Increased By ▲ 0.06 (0.38%)
TRG 120.95 Increased By ▲ 1.20 (1%)
UNITY 14.13 Increased By ▲ 0.03 (0.21%)
WTL 1.33 Increased By ▲ 0.07 (5.56%)
BR100 4,184 Increased By 12.6 (0.3%)
BR30 15,271 Increased By 17.5 (0.11%)
KSE100 41,789 Increased By 266.2 (0.64%)
KSE30 15,778 Increased By 115.4 (0.74%)
Follow us

ISLAMABAD: The Federal Board of Revenue (FBR) collected Rs160 billion tax from tobacco manufacturers last year, which includes Rs157 billion paid by two mega tobacco manufacturers.

The Public Accounts Committee (PAC) met here at the Parliament House to examine the FBR’s Audit Report 2019-20. A brief was also distributed among members on the evasion of taxes and duties by all tobacco companies.

Noor Alam Khan chaired the meeting.

There are 22 cigarette manufacturers in the country. The tobacco industry is an imperfect market, with two players taking up 70 percent of the market share, their contribution to taxes in the form of federal excise duty (FED) and sales tax (ST) is around 98 percent. Local tobacco contributed only two percent of the total FED/ST.

The illicit tobacco trade is a concern for the authorities.

The FBR is cognizant of tax evasion in the tobacco sector.

Though large-scale manufacturing (LSM) being the major and comparatively well-documented sector of the economy, contributes a significant portion of total federal tax revenue.

However, the full real federal tax potential in the LSM segments such as tobacco is yet to be realised. In order to control tax evasion and illicit trade of tobacco products, the FBR has introduced digital monitoring of the production and sale of all tobacco products in 2021.

For this purpose, the FBR issued a license of the implementation of track and trace system (TTS) in March 2021.

Three large manufacturers including two multinationals i.e. PTC PMI, KTC have implemented automated track and trace system and six small tobacco companies are applying tax stamps manually on their products.

The FBR is facing legal challenges in the implementation phase of TTS.

Local tobacco manufacturers have obtained a stay order from the Islamabad High Court (IHC) against the implementation of the FBR’s track and trace system in August 2022

In a written brief, the FBR says, according to a report, “Quantifying the Potential Tax Base of Cigarette Industry in Pakistan” released by Social Policy and Development Centre (SPDC) in 2019, the problems in the tobacco industry reach for beyond smuggling, and expands in the myriad of ways that the industry is underreporting production and sales. This self-assessment has led to an approximate loss of Rs40-50 billion per annum for the national exchequer.

Euromonitor International in its report “Cigarettes in Pakistan - issued in January 2014 claimed: “The illicit cigarettes consist of around 39 percent of total volume sales of cigarettes in 2012”. This report also stated that legal cigarette turnover was 64.5 billion cigarettes.

While examining an audit para, an audit official apprised the committee that the bureau had to face a financial loss of Rs2.56 billion for not collecting value addition tax in 6,874 cases. Duty was supposed to be collected on imported and confiscated items.

Copyright Business Recorder, 2022

Comments

Comments are closed.

From tobacco makers: FBR collected Rs160bn last year, PAC told

Intra-day update: rupee registers gains against US dollar

FY24 budget: FBR invites proposals on income tax

LHC suspends ECP's order de-notifying 43 PTI MNAs

AIIB chief economist briefed about state of economy

Dar inducts four new members into ‘RRMC’

Reason behind cut in PSDP disbursement identified

Rs 417bn received by KP: Cabinet decides to conduct audit

Thar coal-based power plant: COD achieved

Power breakdown of Jan 23: Senate panel directs Power Division to conduct probe

TAPI gas pipeline: Pakistan willing to go ahead with or without India