ISLAMABAD: The Federal Board of Revenue (FBR) Chairman, Rashid Mahmood Langrial, revealed that tax evasion in Pakistan’s tobacco and poultry sectors has reached nearly Rs400 billion, exposing significant gaps in the country's tax collection system.
During a meeting with the National Assembly’s Standing Committee on Finance, Langrial acknowledged the scale of illicit trade in these sectors. He disclosed that despite efforts to combat smuggling, only one out of every ten trucks carrying smuggled cigarettes is confiscated, with most evasion going unchecked due to limited enforcement resources.
The tobacco sector, Langrial said, accounts for approximately Rs300 billion in tax evasion annually. He emphasized that cigarettes lacking the mandatory tax stamp are illegal, and FBR plans to collaborate with provincial law enforcement to combat this trade. The FBR is working on standard operating procedures (SOPs) to enhance enforcement, increasing penalties for non-compliance. Langrial expects a 10% increase in tax recovery once these measures are implemented at the provincial level.
The poultry sector also faces severe tax evasion. Although the industry should contribute around Rs10 billion in taxes annually, it currently only pays Rs1.3 billion. Langrial highlighted that underreporting and the lack of proper accounting in poultry income tax returns have contributed to this discrepancy. With daily production of 800,000 to 900,000 chicks, the sector’s tax collection remains significantly lower than expected. Officials estimate the poultry sector owes around Rs150 billion in back taxes, with annual liabilities of Rs30 billion.
Langrial stated that new measures, including provincial involvement and enhanced penalties, would address these gaps, though he acknowledged challenges in enforcement due to changing sales prices in the poultry sector.
The Standing Committee’s Chairman, Syed Naveed Qamar, raised concerns about the potential for increased harassment of businesses under the proposed measures, but Langrial defended the steps as necessary to close the country’s significant tax gaps and ensure fairness.
