Mills' actual output, tax payments: FBR for placing 'RFID trackers' in sugar sacks

ISLAMABAD: The Federal Board of Revenue (FBR) has strongly recommended that the sugar mills' actual production, sales and tax payments can be effectively checked by placing the Radio Frequency Identification (RFID) trackers within the sugar sacks, which is an inexpensive way of stock monitoring of this sector.

Sources told Business Recorder that the recommendation has been given by the FBR Senior Member Policy while briefing the Sugar Sector Reform Committee meeting which was held at the Ministry of Industries and Production.

FBR Member Inland Revenue Policy suggested that under the track and trace mechanism, placing the RFID trackers within the sugar sacks could be a very effective and inexpensive way of stock monitoring and can be done in collaboration with the

Ministry of Industries/ Provincial Government. Tax authorities of the FBR also highlighted that the monopoly and monopsony of the middlemen in the supply chain was also a major hurdle.

The FBR has already sought applications for grant of five years licence for implementation of Track and Trace System for cement, sugar and fertilizer sectors to monitor the clearances of duties/taxes paid items from around 100 units of these sectors. Though Large Scale Manufacturing (LSM), being the major and comparatively documented sector of our economy, contributes a sizeable chunk of revenue yet the real tax potential of LSM segments like Cigarette, Cement, Sugar, Beverages etc is yet to be realized. Currently across the globe Track and Trace technology offers the most feasible, reliable and straightforward solution, FBR said.

With minimum human interface Track and Trace technology if implemented in a proper transparent manner it can safeguard the interest of revenue by mapping and capturing unregistered segment; act as anti-tax fraud tool entailing visible increase in revenue and disincentivising under declaration and ensure level playing field to all in the aforesaid sectors.

In order to prevent leakage of revenue, under-reporting of production and sales of specified goods and to ensure proper payment of duties/taxes on the manufacture and sale of specified goods, the FBR is mandated to licence the implementation of a track and trace system; which is to be developed, operated and maintained by the licensee for specified goods manufactured in and imported into Pakistan, the FBR added.

During the meeting of Sugar Sector Reform Committee, Minister for Industries and Production briefed the participants that the committee had been formed under the instructions of the Cabinet and the purpose was to encourage a more productive sugar sector in Pakistan through limiting cartelization, rent-seeking and other price destabilizing practices.

Federal Minister for National Food Security and Research Syed Fakhar Imam said that there is a need to do comprehensive analysis of five major crops of Pakistan to analyze as to which once are more profitable for Pakistan, Chair said that we also want to stop rent seeking in sugar sector and to eliminate government interventions distorting the market.

Advisor to the PM on Institutional Reforms and Austerity, Dr Ishrat Hussain asked as to where would be Secretariat of the committee, the Chair pointed out that it would be in the Ministry for Industries and Production.

The Chair requested Wajid Zia Director General FIA to elaborate policy related recommendations of the FIA inquiry report and to specify in the next meeting policy gaps that are needed to be filled in, or interventions of the government that are causing market distortions in the sector as per inquiry findings.

Federal Minister for National Food Security and Research Syed Fakhar Imam commented that an issue critical

to sugar pricing is the accurate measurement of the sucrose content. Cane Commissioner Punjab responded to this saying that Punjab government has established one lab for the purpose which is insufficient. Wajid Zia said that mills have their own labs where they manipulate the information regarding the sucrose content. Cane Commissioner Punjab added that the mill-owners in Punjab have taken stay against a decision of the Punjab government to uniformly determine sugar price against sucrose content. Representative of the Law and Justice Division, Ahmad Atta-ur-Rehman pointed out that the Sindh High Court has vacated the stay. The Chair directed the representative of the Law and Justice Division to give updated status of all the court cases in this regard in the next meeting.

Representative of the Law and Justice Division recommended adding representative of the Competition Commission of Pakistan (CCP) in the committee, the Chair took opinion of all members and decided that senior representative from the CCP should be co-opted. Secretary Industries and Production Division asserted that a representative of the SECP/Finance Division should be invited as both the Securities and Exchange Commission of Pakistan (SECP)/CCP are under it. He also said that he will deliver presentation to the review of the sugar policy 2019-20 in the next meeting. Like wise, he added another presentation on provincial framework by the relevant authorities should be made in next meeting.

It has been decided that all the provincial Chief Secretaries may be asked to give presentations on provincial framework, relevant provincial laws and their respective sugar stock position/mechanism for computation of the stocks.

Secretary Industries will give presentation on sugar policy 2019-20.

It has been decided that the FIA will give a presentation on policy related recommendations of the inquiry report.

It was also decided that the senior Member Competition Commission of Pakistan may be made a co-opted member of this committee.

Copyright Business Recorder, 2020