Currently, many banks adjust their accounts by December 31 to avoid a substantial 40 percent tax on ADR, which has deprived the government of considerable tax revenue
By our correspondent
ISLAMABAD: The Federal Board of Revenue (FBR) has unveiled ambitious plans to launch a large-scale crackdown on smuggling, set to commence in January 2025. FBR Chairman Rashid Langrial shared these initiatives during a briefing with the Senate Standing Committee on Finance, marking a significant step towards addressing the pervasive issue of illegal trade in Pakistan.
A critical component of this strategy involves the implementation of a track-and-trace system within the sugar sector, which aims to curb illegal trade practices. This system is expected to be operational during the current season, demonstrating the FBR’s commitment to enhancing transparency and accountability in one of the country’s vital industries. Langrial further indicated that a similar system for the cement sector is anticipated to be finalized within the next two weeks, reflecting a comprehensive approach to tackling smuggling across multiple sectors.
Digital invoicing has emerged as a challenge for the FBR, particularly regarding licensing issues. However, Langrial assured that the certification processes will be streamlined, with a resolution expected in the coming weeks. This effort aims to improve the efficiency and effectiveness of tax collection, contributing to the overall health of the economy. Additionally, significant changes are on the horizon concerning the advance-to-deposit ratio (ADR) regulations that govern banking practices. Currently, many banks adjust their accounts by December 31 to avoid a substantial 40 percent tax on ADR, which has deprived the government of considerable tax revenue.
The FBR plans to amend this law by the end of the year, thereby closing this loophole and ensuring that the government can better capture due revenue. Another pressing concern highlighted by Langrial is the rampant sale of illegal cigarettes in Pakistan, which constitutes nearly half of the market. In response, the FBR plans to empower provincial authorities to take decisive action against this illegal trade, reflecting a proactive stance on a significant public health issue as well as a revenue concern.
Langrial also noted that Prime Minister Shehbaz Sharif has approved the FBR’s transformation plan, with seven summaries prepared for its implementation. This plan signals a broader reform agenda aimed at enhancing revenue collection and curbing illegal activities across various sectors in Pakistan. The forthcoming anti-smuggling operation, scheduled to begin in January 2025, represents a pivotal moment in the government’s efforts to reclaim lost revenue and foster a fairer market environment.
