Track and trace system: FBR lays down procedure for tax evading sectors

ISLAMABAD: In order to place track and trace system for five major tax evading sectors including tobacco, sugar, cement, fertilizer and beverages, the FBR has made mandatory criteria for company, consortium or joint venture for possessing turnover of $50 million in any of last three years or financial worth of $25 million to get license of placing this system in Pakistan.

The Federal Board of Revenue (FBR) has issued S.R.O. 250(I)/2019 to amend the Sales Tax Rules, 2006 here on Tuesday to lay down procedure for electronic monitoring, tracking and tracing of production, import and supply-chain of tobacco products; beverages; sugar; fertilizer and cement.

Earlier, all efforts to place track and trace system failed because no such mechanism was placed and the adopted process plunged into different controversies. Ultimately the FBR had to scrape down the bidding process. Now with this new mechanism the track and trace system might be implemented in months ahead in order to monitor real production of these five sectors.

The FBR will setup a licensing committee which shall function in accordance with the provisions of these rules. Project Director, Track and Trace System, shall be the convener of the licensing committee and its headquarters shall be located at FBR House, Islamabad.

According to criteria specified by the FBR for grant of a license, the applicant (any company or consortium or joint venture) shall be required to provide technological solutions for the high security tax stamps and related electronic monitoring and tracking system tailored for Pakistani needs on real time basis.

The applicant shall possess the following qualifications to be considered for issuance of license: It shall be a company duly incorporated under the Companies Act, 2017. It shall have experience and past performance in electronic monitoring, tracking and tracing of tobacco products, beverages, medicines, petroleum etc preferably in multiple countries.

It shall be in a financial position to undertake the project - minimum annual turnover of US$50 million in any of last three years or financial worth of US$25 million and it shall have appropriate managerial capacity to execute and run the project.

The system based solution offered by the applicant must have the following features including individually coded stamps to be affixed or applied on each package of the specified goods on the manufacturing lines or at importing station, as the case may be. The stamps shall be associated to every specific brand of a manufacturer; system shall provide for management of the workflow from the requirement or order of the manufacturer to the dispatch, reception and ultimately, application or affixation of tax stamps and activation of codes; the system shall allow the Board or the concerned field offices to monitor the production workflow and activities on a continuous basis; the system shall also provide all necessary functionalities in order to organize and monitor the activity of the controllers and generate requisite reports; mobile control devices or equivalent smart phones for officers of the Board to check the authenticity and trace the stamps on the units of tobacco products in the field; serialized secure stamps on tobacco products; a system providing at the production stage for the association of the stamps with a product defined by its SKU (Stock Keeping Unit).

The system based solution offered by the applicant must have the features of data analysis and communication results thereof to central control room (CCR) and regional control room (RCR); reporting of unauthorized stoppages (include stoppages which cannot be reasonably excused by the relevant officers of the Board or as elaborated by the concerned Commissioner through a public notice) of production.

The system must be stable, fault-tolerant, secure and accessible only by authorized username and password as authorized by the Board; (1) necessary computers and data activation capturing devices on the production lines of manufacturer. This system shall provide that the information given below shall be securely transferred to the data warehouse of Board; (n) information regarding spoiled, lost, unused, stolen and fake tax stamps and reconciliation.

The Track and trace system should include following control functionalities at several level like advanced authentication of all the different profiles on the system (login and password); control of activation in the manufacturing plants and control of controller activity and planning of inspection tours.

The system based solution offered by the applicant shall be able to perform the following functions including monitoring capability on real-time basis of a minimum 50 factory premises or production lines; tracing and tracking of specified goods throughout the country from factory premises to retail level on real time basis; the ability to configure the tracking unit remotely; the system must be capable of sending alert messages and trigger alarms (visible and audible) in case of occurrence of abnormal events such as unauthorized stoppages of production, tempering with stamping machines etc.

In case of absence of communication network coverage the tracking unit of the system must be able to switch over to another network so as to ensure real time tracking without interruption or break; (f) the system reporting should be capable to filter and process the production data for statistical and analytical purposes; (g) the licensee should ensure secure data storage and archiving of data for five years from its generation or recording; (h) ability to use authentication devices, or equivalent smart phones etc. for reading data at various sites; (i) ability to assign Unique Identification Number (UIN) which should contain Complete information about tracking unit including production date, brand name, machine number, location etc.; and all electronic data interface (EDI) communication should be encrypted to ensure secure communications.