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October 27, 2018

FBR to install software for monitoring cigarette production


October 27, 2018

ISLAMABAD: The Federal Board of Revenue (FBR) is moving ahead towards installing software on the premises of legitimate cigarette manufacturers to gauge real production through pasting of stamps in a bid to stop sale of illicit brands into markets.

This millions of dollars project is being done with the help of sole bidder whereby the FBR claims that they will follow the Public Procurement Rules, 2004 as under PPRA Rules, a single bid may be considered if it meets the evaluation criteria expressed in tender notice.

“We have sent all relevant details to PPRA to seek guidance for procurement of Track and Trace System tobacco products,” top official dealing with this project in FBR confirmed to The News on Friday.

The official claimed that there was no cost attached to this Track and Trace System occurred from the national kitty as the manufacturers would bear the cost and recover their investment by slightly raising the price of their product.

According to official minutes of meeting held under FBR chairman on September 15, 2018 states that the procurement process was reviewed through internal arrangement in which six members participated. It was decided that FBR’s procurement experts having well know-how of public procurement will evaluate the procurement process and recommend to Tax Reform Implementation Committee (TRIC) on tax stamps.

When contacted FBR’s Spokesman Dr Iqbal said that he did not know details of this project but the FBR was going to install software of track and trace system to plug tax evasion. He said that the FBR had also undertaken administrative steps to control illicit cigarettes and latest SRO in this regard would help curbing tax evasion. To another query, he said that the FBR would make all out efforts to collect all required through administrative measures.

The broader contours of the Track & Trace System revealed that the semi-visible security features shall be available to the wholesalers and distributors and the field formations shall be able to authenticate the genuineness of any tax stamp.

Accordingly, FBR issued an addendum to the above RFP in June 2018 addressing concerns raised by the bidders and incorporating CCP’s recommendations. Extension of two months was provided to bidders to submit their bids.

In response to the RFP (as amended by the Addendum), a single bid was received on the due date of August 17, 2018, the FBR said. According to the FBR, the bidding process was carried out fairly and transparently and adequate opportunity was provided to all prospective bidders.

The FBR had conceived idea of placing track and trace system a few years back but it remained on the backburner. They had identified five sectors including sugar, cement, fertilizer, beverages and tobacco to gauge their real time production and plug billions of rupees tax evasion. But lately it was decided that only tobacco units will be monitored.

This project known as electronic monitoring system for track and trace will have estimated procurement and operational cost of millions of dollars. Initially, four selected firms in the race were present including 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. But finally one firm had participated in the bidding.

But the sources in the FBR say that it is wonderful idea on the paper but whether the FBR possesses capacity to use this visual as tool for generating the desired revenue generation or not, is not yet known.

However, the FBR officials said that the electronic monitoring was allowed by Parliament through Finance Bill so it possessed legal cover. In US state of California, with the help of trace system their tax revenues increased by $150 million. Indonesia is monitoring over 50 items through these hi-tech systems. In Pakistan, it will be first step at industrial level to gauge production in potentially tax evading sectors where production is hiding and minimizing to evade taxes at manufacturing level.

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