Sales of goods made in tax-free zones: Senate panel raises alarm over FBR’s weak monitoring

ISLAMABAD: A parliamentary panel on Monday expressed serious concerns over the lack of effective checks and balances by the Federal Board of Revenue (FBR) on sales of products manufactured in tax-free zones of the erstwhile tribal areas and sold in tariff areas of Pakistan.

A meeting of the Sub-Committee of the Senate Standing Committee on Interior and Narcotics Control was held under the convenorship of Senator Saifullah Abro. The meeting was attended by Member Committee Senator Muhammad Talha Mahmood and Umer Farooq.

The Sub-Committee deliberated on the matter regarding the theft of 2,828 cartons of cigarettes from the godowns of the Federal Board of Revenue (FBR) in Swabi and Mardan.

Senator Saifullah Abro expressed serious concerns over the performance of Pakistan Customs, particularly regarding the lack of a monitoring mechanism on sales from tax-free zones in the erstwhile FATA region. He observed that certain business entities had established factories in these zones; instead of benefiting the local underprivileged communities, they were distributing their products across the country.

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The Chairman of the Sub-Committee further expressed concern over the sale of goods at inflated prices in tax-exempt areas such as Malakand and the former FATA region. He reiterated that such concessions were intended to support local and underprivileged communities; however, industrial units were exploiting these incentives by distributing goods nationwide instead of limiting their benefits to the designated areas.

On the issue of theft of 2,828 cartons of cigarettes, officials of the Federal Investigation Agency (FIA) informed the Committee that the security guard of the warehouse had been interrogated; however, he denied all allegations and claimed that he was never in possession of the keys. The FIA further disclosed that the warehouse in charge had not been formally deputed by the department, terming it a serious lapse.

During the session, the committee chairman expressed strong displeasure over the absence and non-serious attitude of officials, stating that officers readily accept senior positions but fail to prioritize attendance at important meetings, which is unacceptable. Senator Abro directed the authorities to provide documentation regarding the import of machinery by Paramount Tobacco Company. The Regional Tax Office (RTO Peshawar) informed the Committee that the company had declared the value of its machinery at Rs. 3.5 million in its 2018 returns, adding that such companies often procure second-hand machinery and refurbish it for operational use.

The Sub-Committee expressed dissatisfaction over the incomplete information provided by the FIA. The agency assured that comprehensive details would be furnished in the next meeting.

The Chairman of the Sub-Committee also raised concerns over delays in the submission of statements from the Tobacco Company. The FIA officials informed that although the company’s owner had been summoned, he had filed a petition in the High Court, alleging harassment by the agency. Senator Abro directed that individuals who fail to appear before the FIA after being summoned should be arrested after seven days, in accordance with the law.

A Member of the FBR emphasized that identifying the ultimate beneficiaries of the stolen cigarette cartons would significantly aid in resolving the case.

Pakistan Customs apprised the Committee of the measures taken to curb smuggling in the country, while noting that a significant proportion of smuggling incidents occur in Balochistan.

The Committee directed Pakistan Customs to submit comprehensive details of seized items lying in the provinces of Khyber Pakhtunkhwa and Balochistan from 2012 to date. It also sought details of beneficiaries involved in the smuggling of goods during the same period.

Senator Talha Mahmood emphasized that no verbal explanation regarding the machinery would be accepted and that all details must be submitted in writing.

The committee also sought details from FBR regarding smuggled goods, particularly cosmetics and skimmed milk, noting that these items are largely consumed in Punjab. Furthermore, authorities were directed to provide a complete record of confiscated goods lying in warehouses and at airports from 2012 to 2026.

The committee directed all relevant departments to present complete records and a progress report at the next meeting.

Senator Talha Mahmood directed that if involved tax officials fail to appear by April 2, they should be immediately arrested. He also demanded that the involved FBR officials be brought before the committee in handcuffs if necessary, the Senator demanded.

Copyright Business Recorder, 2026