ISLAMABAD: Leading cigarette manufacturers Friday raised serious questions over the performance of the Federal Board of Revenue (FBR) regarding the utilisation of track and trace system data for cigarette market monitoring to curb illicit trade in the market.
The representatives of a top multinational cigarette manufacturing company told reporters that only few companies have implemented the T&T system in their operations. Few units have just signed the agreements for installation, but yet to implement in the true letter and spirit.
Lack of enforcement and implementation of T&T system and stay orders from the courts have played a key role in the failure to achieve tax collection targets from tobacco industry and controlling the illicit cigarettes trade.
‘Illicit cigarette manufacturers exploit export quotas, evade advance tax’
Legitimate players including Pakistan Tobacco Company and Philip Morris have paid billions for tax stamps over the past year to comply with government directives, however, it seems that there is no data reconciliation to monitor the tax evasion by illicit players or even how the market is being exploited by the illegal players through mushroom production and supply of illegal cigarette brands without T&T stamps in the market, they said.
Serious concerns have been raised about the current status of T&T system in tobacco industry as cigarette packs without stamps are openly being sold without any checks and balances. There have raised some serious questions on the performance of FBR and other relevant institutions when it comes to use of track and trace system data for cigarette market monitoring and bringing more improvements in tax collection and curbing the illicit trade in the market.
Expert also urged the FBR to frequently publicly share data on tobacco purchase, cigarettes production and tax returns by all the cigarette manufacturers.
The FBR needs to analyse that how much tobacco was processed at GLTs and how much adjustable FED was collected from cigarette manufacturers and how much of this adjustable FED was actually adjusted against the final liability. FBR also need to check that how does the GLT processing correspond with the leaf buying of these manufacturers.
Market is still witnessing a huge quantity of cigarette packets without tax stamp’s are being sold with impunity despite many statements from government dignitaries to control illicit cigarettes trade at multiple occasion. Smuggled and counterfeit cigarettes have increased exponentially since extra ordinary increase in excise duty in mini budget of February 2023.
Tax experts urged FBR to carry out coordinated enforcement activities against illicit cigarettes openly available in the market and punish the culprits in such a way that the illicit trade can actually be controlled rather only confiscating the cigarettes pack and leaving the culprits to continue their dirty business.
Copyright Business Recorder, 2023
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