AJK cigarette makers: need to conduct enforcement, investigative audit emphasised

Most of the tax laws of the Federal Board of Revenue (FBR) applicable on cigarette sector in Pakistan have been adopted by Azad Jammu & Kashmir (AJK) where enforcement and investigative audit of the producers is needed to check duty evasion in the AJK-based cigarette industry.
Sources told Business Recorder here on Friday that the issue of the tax laws enforcement on cigarette manufacturers within the territorial jurisdiction of the AJK was discussed during policy dialogue held in Muzafarabad on illicit trade in tobacco sector of AJK. The experience of audit by the FBR would also be shared with the AJK authorities. Latif Akbar, Finance Minister, Government of AJK announced that the government of Azad Jammu & Kashmir has decided to form a high level task force headed by the Finance Secretary to formulate and implement enforcement strategies to plug leakage of revenue from the cigarette manufacturing units located in AJK region.
This was announced by Latif Akbar, Finance Minister, Government of AJK, while speaking at a policy dialogue held in Muzafarabad on illicit trade in tobacco sector of AJK, which is a national problem as it affects the whole country. Addressing senior officials, the Finance Minister stated that AJK Government is facing financial issues and needed all possible resources to fulfil its development agenda. He stressed that to effectively improve Government revenue collection there was need to plug the leakages which result in heavy losses to the exchequer.
On the occasion, Chief Secretary AJK Government issued instructions to law enforcement officers to ensure proper tax collection from cigarette manufacturing units located in AJK. During the session, officials of AJK Government informed the participants that there were 14 cigarette manufacturing units in AJK out of which 5 are operational. Some of the remaining units are either non-operational or already sealed by the Government for violation of tax laws.
According to data shared during the session, most of the cigarettes produced in these manufacturing units are then shipped to Pakistan and are widely available at prices below Rs 25 which is the minimum tax applicable on each packet of cigarettes. This clearly proves that these cheap brands are sold without payment of applicable duties. Hence, not only Government of AJK but Government of Pakistan also suffers revenue loss due to ever growing sale of these cheap duty evaded cigarettes.
During the session, it was also shared by officials of AJK Government that most of the laws applicable on cigarette sector in Pakistan had been adopted by AJK too. Hence, the real issue was not lack of regulations or legal framework, but of implementation and enforcement of laws. The officials agreed on extensive investigative audits of the cigarette manufacturing units including audit of raw materials used like cigarette filter rods, cigarette paper and tobacco, they said. The announced task force would develop a comprehensive strategy to check duty evasion in the cigarette industry and ensure that enforcement is carried out effectively.
Pakistan Tobacco Board (PTB) offered its full support to AJK Government in its efforts to curb leakages of revenue. The amount of tobacco purchased by these manufacturing units could also help in determining their capacity and production volumes. PTB collects such data and offered to share that data with Government of AJK for analysis and addressing this issue. On the occasion, Government of Pakistan officials were also present which included officials from Ministry of Kashmir Affairs and Northern Areas, Federal Board of Revenue and PTB.