ISLAMABAD: The Federal Board of Revenue (FBR) faces a mixed bag in its efforts to implement a track-and-trace system for tobacco products, with major industry players like Pakistan Tobacco Company (PTC) and Philip Morris complying, while smaller manufacturers lag behind.
PTC has integrated the system across 19 production lines, PMI across 7, CM Tobacco Industries across 4, and Khyber Tobacco Company across 9. However, companies like Civil Tobacco, Frontier Leaf Tobacco, Falcon Cigarettes Industry, Indus Tobacco Company, and Maneri Tobacco International have implemented it on only one line each, despite FBR’s signing memorandums of understanding (MoUs) with a total of 26 companies.
Some manufacturers cite technical and financial difficulties, leading to concerns about the track-and-trace system’s efficacy, crucial for curbing tax evasion and illicit trade in the sector. The system, relying on barcodes, unique identification numbers, and a central monitoring system, aims to trace tobacco products from production to sale. The FBR, responsible for collecting various taxes, faces challenges in tracking and tracing goods within Pakistan, resulting in significant revenue losses. While the track-and-trace system is planned to cover tobacco, sugar, fertilizer, and cement, concerns persist about its unique implementation challenges in Pakistan’s illicit tobacco trade.
Despite the FBR setting a December 2023 deadline for full implementation, skepticism looms among industry observers. Strict action against non-compliant manufacturers, comprehensive enforcement, and collaboration with stakeholders like the Inland Revenue Enforcement Network (IREN), customs, and law enforcement agencies are deemed essential for the system’s success. The partial implementation highlights the challenges in combating tax evasion and illicit trade in Pakistan’s tobacco sector. Drawing lessons from successful implementations in other countries, the success of Pakistan’s system hinges on addressing gaps and ensuring robust enforcement.
