Tile manufacturing: Rs30bn tax evasion triggers FBR-Chinese co showdown

ISLAMABAD: A stunning disclosure of more than Rs 30 billion in annual tax evasion in the tile manufacturing sector has pushed the Federal Board of Revenue (FBR) into strict enforcement mode, triggering a fierce showdown between the FBR and a Chinese company during a meeting of the Senate Standing Committee on Finance.

FBR Chairman Rashid Langrial, during a briefing to the Committee chaired by Saleem Mandviwalla, said that it has decided to install AI-powered monitoring cameras at production lines across major sectors to plug massive leakages, asserting that the move will also help secure Rs 76 billion in additional revenue from sugar and Rs 102 billion from cement this year alone.

But the crackdown sparked a tense clash when a Chinese company aggressively opposed the placement of cameras in its tile factories. The company insisted it was willing to pay sales tax without surveillance and argued that “no such system exists in Saudi Arabia, Thailand or anywhere else.”

FBR Chairman delivered a blunt warning: “Install the cameras or shut down your business.”

When a representative of the Chinese company asked the chairman of the FBR, “Do you need tax or cameras? The FBR Chairman replied that he needed cameras.

He said the authority had already reduced the required cameras from 16 to just 4 — to be placed at conveyor belts, packaging zones, and entry–exit points — enabling AI-based video analytics to count every single tile produced and dispatched.

FBR extends T&T system to tiles sector

The Chinese company claimed the move could compromise its trade secrets and hurt foreign investment. But the FBR Chairman pushed back hard, saying: Cameras are already installed at sugar mills owned by federal ministers with zero objections.

The Prime Minister himself has ordered video surveillance across all sugar mills. “We don’t trust company-managed counting. We trust AI”, he added.

He further confirmed that surveillance cameras will soon be mandatory across all major industrial sectors, including sugar and cement, as part of a nationwide campaign to crush tax evasion.

Minister of State for Finance Bilal Azhar defended the installation of cameras at factories, saying it favours industry by eliminating physical FBR presence and harassment.

“AI-based video analytics count production. The real objective is accurate output measurement so sales tax is fully paid,” he said, adding that camera points were already reduced from 16 to 4 on the business community’s demand.

Kayani said Prime Minister Shehbaz Sharif holds frequent interactions with business leaders and that the government is committed to providing “every possible facilitation” to investors and industry. The committee discussed a point raised by Senator Zarqa Suharwardy regarding reports that some Islamic banks are compelling female employees to wear abayas. The State Bank officials clarified that dress code policies vary across banks, and the Committee members emphasised a regulatory notification by the State Bank of Pakistan requiring only modest, professional dress.

Mandviwalla slammed banks for charging exorbitant interest in the name of Islamic banking.

The committee examined the discussion on Starred Question No. 24, raised by Senator Kamran Murtaza and referred from the House on 9th October 2025, regarding the reported Rs. 375 trillion financial irregularities. It was noted that this figure resulted from a typographical error in the consolidated executive summary, which was verified and corrected by the Attorney General, confirming that no statutory report contained the error, while a fact-finding inquiry is also underway. The Auditor General will provide a full briefing on the Rs. 9 trillion figures in a separate session. Kayani told the committee that the consolidated amount under review was Rs 9 trillion, acknowledging an error in adding up the numbers and offering a separate verification meeting with the AGP office. The committee accepted the proposal and

The committee also reviewed the non-implementation of the Presidential order of 16-07-2025. After a thorough discussion, the Committee directed that the Presidential order be implemented.

Moreover, the committee addressed the fire hazard in the Export Processing Zone (EPZ) Karachi, where large quantities of un-cleared scrap and waste had accumulated due to delays in removal and auction procedures. Officials confirmed that past fires were not caused by waste accumulation, but EPZ representatives denied this. It was noted that new procedures will ensure automatic monthly disposal to prevent further risk. The committee unanimously ratified the nominated members of the FBR Policy Board under Section 6(5) of the FBR Act, 2007.

Salary disparities for tenure-track faculty of the Institute of Quality & Technology Management, University of the Punjab, were also reviewed. It was noted that despite a 2021 directive to maintain a 35% differential, delays persist, pushing faculty toward litigation. The Committee urged Finance and Education authorities to coordinate and resolve the issue promptly.

Additionally, the Committee discussed the backlog of consignments at the Sost Border, noting that delays in customs clearance and auction procedures had left goods stranded for months. Officials stated that most consignments have been cleared, generating revenue. The Committee stressed the need for mechanisms to prevent a future backlog.

In attendance were Senators Farooq Hamid Naek, Manzoor Ahmed, Zarqa Suharwardy Taimur, Dilawar Khan, Kamran Murtaza (participated online), the Minister of State for Finance and Revenue, the Chairman FBR, Representatives from SBP, the Deputy Auditor General, and senior officials from concerned departments.

Copyright Business Recorder, 2025