FBR to use cameras to stop tax evasion

ISLAMABAD: In a major move, the Federal Board of Revenue (FBR) has decided to install cameras on the premises of industrial units of five selected sectors — sugar, cement, fertiliser, beverages and tobacco — to gauge their real time production and stop billions of rupees tax evasion.
This project, known as electronic monitoring system for track and trace, will have estimated procurement and operational cost of millions of dollars.
With the participation of international bidders, the procurement process is underway to select a firm which will be responsible for installing cameras at production lines of the five selected sectors all over the country and they will also monitor the operational process of securing recording of visuals close to real time, ensuring its safety and making it available for tax collectors.
This track and trace system through use of technology is expected to increase the tax revenues. The FBR team, led by Chairman Tariq Bajwa, visited Turkey this week to study their stamp system that helped the country to jump start their revenue collection substantially.
When contacted on Friday, FBR Chairman Tariq Bajwa said that they had gone to Turkey to understand their entire taxation system, including this track and trace system.Turkey, he said, had got benefits from this kind of electronic monitoring system but their system was more comprehensive while in Pakistan, there was a need to achieve this objective.
He concluded that the bidding process was underway after which timelines of the project would be put in place when the first pilot would be launched. Afterwards, it would be replicated across the country.
However, top official sources in the FBR said that four firms showed their interest in this project for installing cameras at 167 industrial units of selected five sectors but the stage for financial bidding had not come as yet.
The four selected firms in the race are SICPA (Swiss firm), Authentix (US firm) in joint venture with Jaffar Brothers, Arjowiygins (France) in joint venture with SIS and Decatur in joint venture with Reliance Pvt Ltd.
The FBR sources said that in order to ensure transparency, they had written letters to the Public Procurement Regulatory Authority (PPRA) and National Accountability Bureau (NAB) to scrutinise the procurement process and guide them at every stage to make this transaction transparent in all its aspects.
However, sources in the FBR say that it is a wonderful idea on paper but whether the FBR possesses the capacity to use this visual as a tool for generating the desired pool of revenue or not is not yet known.It is yet to be seen how the FBR will install cameras at factories owned by Zardari, Sharifs, Syeds and Tareens.
The FBR officials said that the electronic monitoring was allowed by parliament through the Finance Bill so it had got legal cover. After completion of the project, which will run on pilot basis for four months and will be replicated all over the country in the next six months, certain rules will be placed under which heavy penalty will be proposed in case of damage toequipment by factory owners.
When asked about examples of any other countries where such systems were used for taxation purposes, the official said that the FBR team had visited Turkey to study their track and stamp system where stamping was done on each produced item with serial number and it could be traced at retail outlets sold in any part of the country.
In the US state of California, with the help of trace system, their tax revenues had increased by $150 million. Indonesia is monitoring over 50 items through these hi-tech systems.In Pakistan, it will be the first step at the industrial level to gauge production in potentially tax evading sectors where production is being hidden and minimised to evade taxes at manufacturing level.