FBR orders factories’ electronic monitoring to curb sales tax evasion
The Federal Board of Revenue will monitor production and sales through a new electronic system.
According to an FBR notification, factories producing packed ghee and edible oil will be placed under electronic monitoring. Electronics, home appliances, paper and cardboard factories will also be covered by the system.
More industries brought under monitoring
The notification states that leather products, garments, textile and ginning factories will also have their production monitored electronically. The move will cover production activities in the specified industries.
The system is intended to provide the tax authorities with more accurate information about factory output. It will also help officials track production levels more closely.
Factories must obtain monitoring equipment
Under the notification, the relevant industries will have to obtain monitoring equipment from one of four approved companies. These include Obsydian Technologies, Tollink Pakistan, Authentic and ISSM Labeling.
FBR said all four companies have been verified by the board as approved providers of electronic monitoring services. The relevant factories will have to remain connected to the monitoring system for three years.
System aims to improve tax collection
According to the notification, the new system will help determine the actual production and sales of factories more accurately. This is expected to make it easier for FBR to ensure the complete collection of sales tax.
The electronic system will give tax authorities greater visibility into production and sales activities. FBR’s move is aimed at reducing the gap between actual business activity and sales tax reported by industries.
The new monitoring system could make it harder for factories to underreport production or sales. It may also give FBR more reliable data for calculating sales tax liabilities.
The success of the system will depend on its implementation and the accuracy of the electronic data collected. Industries will also have to adjust to the new monitoring requirements for the three-year period.
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