FBR Ramps Up Crackdown on Illicit Items with Digital Tax Stamp Verification

Pakistan’s Federal Board of Revenue (FBR) is intensifying its fight against illicit goods, particularly counterfeit cigarettes. This crackdown comes amidst concerns about the prevalence of untaxed cigarettes, which reportedly capture nearly 63% of the Pakistani market.

Digital Tax Stamps in Action:

The FBR’s Inland Revenue Operations arm launched a nationwide exercise to verify digital tax stamps on various products. Regional Tax Offices (RTOs) across the country, including Karachi, Lahore, Faisalabad, Peshawar, and Rawalpindi, are actively checking the authenticity of digital stamps on:

  • Cigarette packets
  • Sugar bags
  • Fertiliser bags

This verification process aims to identify and seize counterfeit goods, ensuring proper tax collection and a level playing field for legitimate businesses.

Second Major Crackdown:

This initiative marks the second significant crackdown by FBR against illegal cigarettes and other sectors covered under the digital track and trace system. The move comes amid pressure on the FBR to enforce stricter measures against non-duty-paid goods.

The Role of IREN:

The FBR’s Inland Revenue Enforcement Network (IREN) plays a crucial role in this digitalization push. IREN’s responsibilities include:

  • Monitoring stamping machines at manufacturing facilities
  • Verifying tax stamps
  • Taking action on reported disruptions in the track and trace system
  • Inspecting defective tax stamps

Beyond Cigarettes:

While the current focus is on cigarettes, the digitalization initiative likely encompasses other sectors as well. Further research can reveal the specific industries targeted by the FBR’s digitalization efforts.

This crackdown on illicit goods highlights the FBR’s commitment to curbing tax evasion and fostering a fairer marketplace. By leveraging digital tools like tax stamps and the IREN network, the FBR aims to create a more transparent and efficient tax collection system.

Digitalization Efforts Expanding:

The track and trace system, implemented in 2021-22, is gradually being expanded to encompass all imports and domestic production of designated sectors. While FBR initially covered 20% under its purview in the last fiscal year, further expansion is expected.

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