Suspected cigarette makers: FBR to conduct special audit, says Hafeez

Finance Minister Dr Abdul Hafeez Sheikh has said the Federal Board of Revenue will conduct special audit of suspected cigarette manufacturers. He was addressing a national enforcement dialogue on tax evasion in Pakistan, here recently.
Hafeez said that mobile customs squads would check smuggling and joint investigation teams of Directorate General of Intelligence and Investigation Customs and Directorate General of Intelligence and Investigation Inland Revenue (IR) would conduct investigation to check evasion in cigarette industry.
With particular reference to the cigarette industry, Hafeez said in cases where smuggling of cigarettes as well as local component of tax evasion is involved, joint investigation teams of Directorate General of Intelligence and Investigation Customs and Directorate General of Intelligence and Investigation Inland Revenue (IR) would carry out investigation.
In cases where a unit/dealer, etc, is involved in smuggling of cigarettes as well as local brands are not subjected to sales tax and the FED, JITs of these directorates would carry out investigation as per their jurisdiction and mandate under prevailing tax laws.
He said tax evasion is rampant in the cigarette industry and the government has decided to take practical steps to curb this practice. The FBR's mobile squads/teams would become fully operational all over the country from May 1, 2012 and special audit of suspicious units would be carried out within next 60 days. Joint teams of the FBR's Customs Intelligence and Inland Revenue Service (IRS) would especially supervise the clearance procedure, he added.
He said the culture of tax evasion is a serious issue in Pakistan and the government is taking concrete steps to control this menace. The minister said that tax evasion is causing revenue shortfall in the country and thus hampering national development and public welfare projects and dependence on foreign loans is increasing due to this undesirable practice. The finance minister also highlighted that weak regulatory mechanism is one of the reasons for tax evasion as it encourages tax evaders resulting in ever-increasing number of people and organisations start getting involved in tax evasion.
Speaking on the occasion, FBR Chairman Mumtaz Haider Rizvi rejected the impression of non-existence of effective tax mechanism in the country. He said the issue of tax evasion in the cigarette industry is of very serious nature and is caused by non-compliance to the legal framework. He said the FBR has established a dedicated cell in Peshawar which is doing all to check production and distribution of illegal cigarettes as well as entry of smuggled cigarettes into the country which is evident from recent successful raids in KP and Sindh. The FBR chairman said introduction of special audit system to check suspicious tax evasion has helped a lot in countering tax evasion.
Prominent economist Dr Ashfaque Hasan, Member Inland Revenue Shahid Hussain Asad, DG Customs Intelligence Muhammad Riaz, Member of Parliament's Finance Committee Kashmala Tariq and President of Supreme Court Bar Association Yaseen Azad also addressed the national dialogue.