ISLAMABAD: The Federal Board of Revenue (FBR) Wednesday said that it had taken numerous measures to check the smuggling of foreign brands of cigarettes; however, lack of required enforcement staff and infrastructure smuggling of illegal brands continued. Currently as stock of illegally smuggled cigarettes worth Rs 1.5 billion is in the custody of FBR officials which reflects the untiring efforts in this regard.
While responding to the special audit report on the causes of decline in tax collection of tobacco sector here at Public Accounts Committee of the Parliament, FBR members Inland Revenue Dr. Muhammad Iqbal, Administration Tasneem Rehman along with other higher officials were of the stance that besides FBR, other administrative organs of the state were also equally responsible for checking the sale of illegally smuggled cigarettes.
They were also of the view that third tier slab of tax on tobacco sector was introduced through finance bill 2017 by the parliament therefore it would be unjust to hold FBR along responsible for the decline of tax revenue collection from the tobacco sector.
The copy of the report available with Customs Today has proposed that FBR must rationalize the federal excise duty (FED) which significantly raises cigarettes prices and reduces tobacco use. FBR must also take adequate measures to check illicit trade comprising forfeited brands and non-duty paid sale of cigarettes. FBR must strengthen tobacco tax administration, increase enforcement and tax duty free sales of tobacco products in order to reduce tax evasion and avoidance.
The report further states that FBR must implement annual adjustments to tobacco federal excise duty rates so that they result in increases the tobacco product prices that are at least as large as increased in per capita incomes.
FBR must monitor the processing of cigarettes at ten Green Leaf Threshing (GLT) units with withholding tax at the rate of 5% which can further be increased up to 25% at this initial stage of tobacco processing in GLT units. It will wipe out all the incentives to produce illicit cigarette because these ten GLT units can easily monitored and the opportunity to avoid FED after manufacturing of cigarettes will be no more.
