Pakistan to roll out track and trace system to help tax collection, digitize economy

In this undated filed photo, a trader counts Pakistani rupee notes at a currency exchange booth in Peshawar, Pakistan. (REUTERS/File)

• The system will initially be used to monitor four major economic sectors where counterfeiting, tax evasion and smuggling remain rife
• It will help bring 45 million tons of cement, four billion cigarette sticks, four million tons of sugar and 30 million tons of fertilizer into the tax net

ISLAMABAD: Pakistan’s tax collection agency has decided to launch a track and trace system from November that will focus on tobacco, cement, sugar and fertilizer industries to enhance the government’s revenue and curb smuggling of illicit goods, officials said on Wednesday.
The Federal Board of Revenue (FBR) will initially use the system to monitor the four major economic areas where counterfeiting, tax evasion and smuggling are thought to be highest in the country.
Pakistan has been struggling to digitize its trade to boost its revenue and support its fragile economy. After years of court cases and departmental wrangling, the FBR is finally working on the system and wants to roll it out with the help of an international company.
The track and trace system involves implementation of a robust, nationwide electronic monitoring system of production volumes by affixation of more than five billion tax stamps on various products to shadow their flow throughout the supply chain.
“We will be able to roll out this system by the end of November,” Nadeem Rizvi, an FBR spokesperson, told Arab News. “Production and sale of such items will be documented and reported to the board automatically.”
The FBR signed a contract with a consortium, AJCL, and its lead partners, Authentix Inc. of the USA and Mitas Corporation of South Africa, in March this year to operationalize “Track & Trace Solution,” though its implementation got delayed due to a case in the Sindh High Court.
The court has now dismissed the petition filed against the activation of the new mechanism.
Officials say the system would help the FBR bring 45 million tons of cement, more than four billion sticks of tobacco cigarettes, over four million tons of sugar, and more than 30 million tons of fertilizer into the tax net.
Experts said the implementation of the system would be a “game changer” in documenting the country’s major economic activities, help improve revenue forecasting and check counterfeit products in the market.
“The system will help the local industry, consumers and the government,” Shabbar Zaidi, a former FBR chairman, told Arab News. “Everyone will benefit from it.”
Zaidi said the smuggling and counterfeiting of various products was hurting the local industry and making the government lose billions of rupees annually in revenue.
“The system will enable the FBR to monitor production and sales of key products and collect actual taxes that could run into billions of rupees,” he added.