‘Track, trace system not fully implemented by tobacco sector’

ISLAMABAD: Ahead of the FBR’s briefing to the IMF review mission on the Track & Trace System (TTS), a tobacco sector giant stated only two multinational companies out of 40 manufacturers implemented the system.

“The majority of the industry players did not implement the TTA on different excuses, resulting in blatant tax evasion to the tune of Rs310 billion against the legit industry’s tax contribution of Rs241 billion for the current fiscal year. The TTS has so far proved a failed project to curb tax evasion,” the Pakistan Tobacco Company (PTC) representatives stated in a media briefing on Tuesday.

Only two multinational giants, Pakistan Tobacco Company and Philip Morris (PMI), had implemented TTS fully while Khyber Tobacco had partially implemented it, they added.

The FBR high-ups are scheduled to brief the visiting IMF team on the much-hyped TTS on Wednesday (today).

The tax-paying industry had reached a point where PTC had applied to the FBR that three of its machines were going to be exported from Pakistan. Only 9 out of 17 machines were operating in two factories of the PTC while 8 were closed down. Out of nine machines, the PTC has sought permission from the FBR to export it from Pakistan, they added.

Mona Iskandarani, Area Head of Legal & External Affairs, Asia Pacific, Middle East and Africa (WEST), at BAT Group here on Tuesday during a media briefing session on the efficacy of the Track and Trace System in the tobacco sector, organized by the Pakistan Tobacco Company (PTC), stated the success of Track & Trace will depend upon the implementation of the system in its true letter and spirit across the board coupled with a sustained enforcement drive.

“We acknowledge the recent enforcement initiatives undertaken by the Federal Board of Revenue (FBR) in Pakistan but we need sustained enforcement efforts across the supply chain to curb the menace of illicit cigarette trade in Pakistan,” she concluded.

Asad Shah, Director of Legal & External Affairs, PTC, pointed out that Track & Trace has been implemented in various countries in one form or the other, but the system does not offer a silver bullet solution to fight illicit trade, and only serves as a tool to facilitate law enforcement agencies to carry out raids and seizures of tax evaded products.

The illicit manufacturers are openly flouting laws by using counterfeit stamps, by placing stamps over the polypropylene wrapping on a pack of cigarettes. Some players are even applying stamps on cigarette packs manually, which defeats the whole purpose of a Track & Trace System in Pakistan, which is to monitor production volumes. Illicit cigarette packs without a Graphical Health Warning and without Track & Trace stamps are being sold in the market openly.

The majority of duty not paid (DNP) cigarettes are being manufactured in AJK and strict enforcement measures need to be taken at entry and exit points of AJK to ensure that no tax-evaded cigarettes make their way into the country.