Tracking tax evasion

The effective implementation of the Track & Trace System (TTS) has the potential to contribute bil­lions of rupees to the national trea­sury, which is currently being lost to illicit trade. However, the imple­mentation and installation of TTS in manufacturing units across key sectors such as sugar, cement, fer­tilizer, and tobacco are progressing slowly. This delay is attributed to a lack of interest from the authori­ties and resistance from manufac­turers involved in illicit activities.

There is a consensus among in­dustry experts, legal compliance companies, and to some extent, the government, that the track and trace system is not only instrumen­tal in widening the tax net by incor­porating tax evaders but also rep­resents the only long-term solution to the nation’s revenue challenges.

An international report on tax evasion stated that Pakistan faces significant losses, Rs.956 billion, due to tax evasion and illicit trade in key sectors. Specifically, the to­bacco sector alone incurs losses of Rs.240 billion due to the activities of illicit cigarette manufacturers.

Recently, Prime Minister Shah­baz Sharif also took notice of the slow progress in the TTS imple­mentation across key sectors. He instructed authorities to establish a committee tasked with identify­ing obstacles to TTS deployment and those implicated in tax evasion within seven days.

However, temporary fixes will not resolve Pakistan’s revenue issues. A sustained effort to expand our tax base is crucial. To this end, there is a need for the government to expe­dite TTS implementation and take decisive action against manufactur­ers who resist adopting this system.



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