IMF gives deadline for track & trace system

Production, supply of cigarettes, other products to be electronically monitored; FBR hopes to generate Rs20b revenue

ISLAMABAD: The International Monetary Fund (IMF) has asked the government to ensure that the system to electronically monitor the production and supply of cigarettes and other products of tobacco is completely operational by March 2020.

The lending agency has also directed the relevant departments that to meet this deadline, the bidding process should be completed by September 2019 and successful bidding company should be issued the license to implement this Track & Trace System. The IMF has also asked the government to withdraw the legal provisions aimed at limiting the tax audit.

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While confirming these directives of the IMF, the officials in Federal Board of Revenue (FBR) said to award the contract for installation of Track & Trace System, applications would be called from the interested companies from next week and the successful bidder will be issued license.

However, the Ministry of Finance through a letter (copy of which is available with The Express Tribune) has informed the FBR that under the Memorandum of Economic Framework Program (MEFP) agreed with IMF for the release of six billion dollars loan, no amnesty scheme would be introduced until the end of the program. Confirming these IMF conditions Finance Ministry directed the FBR to withdraw all those provisions that place limit on audit and meet all the deadlines to issue license and implement the system accordingly.

In this regard, the Ministry of Finance has also asked the FBR a certificate stating the implementation of the targets of Structural Benchmarks within the stipulated timeframe should also be submitted to the ministry.

When contacted, the FBR officials said that process has already been initiated to implement the conditions of the IMF and to meet given deadlines. A draft amendment notification is also being prepared to withdraw the provisions placing limits on tax audit and will soon be forwarded to the law division for consent.

They said all necessary work has been completed for the bidding of licenses to implement the electronic monitoring system for the production and supplies of

Sugar, beverages, cement and fertilizer besides other goods and products.

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According to sources, with the implementation of this system, which has already been delayed by nine years, FBR would be able to generate additional revenue of Rs20 billion through Sales Tax.

These sources said that former finance minister, Asad Umer had expressed his annoyance over the delay in implementation of Track&Trace System  project, and had not only directed  to introduce the system  for monitoring of tobacco products until March 2020 but also formed a two-member committee to look into the reasons for the delay and fix responsibility so that action could be taken against officers causing the delay. The committee was given one month time to complete the inquiry. But with the retirement of the committee chairman, Tanvir Akhtar, no progress could be made in this regard and with Asad Umer also resigning the inquiry was wrapped up.

However, after taking over charge of adviser on finance Dr Hafeez Sheikh has ordered to complete the process within the timeframe given by IMF. Sources said that with the implementation of the system, the cigarettes sold without stamp will be seized and actions will be taken against vendors who sold without stamp.

The manufacturers will bear the cost of Track &Trace System project, said the sources adding that stamp being introduced by the State Bank of Pakistan to check evasion of Federal Excise Duty will ensure foolproof system.