Senate to hear FBR details on tobacco sector taxes

September 12, 2018 (MLN): A special meeting between the Federal Board of Revenue (FBR) and Senate Committee, led by Senator Kalsom Parveen, will be held today to ascertain the reasons of revenue shortfall in the tobacco sector, while an FBR team will brief the committee on the issue.

This marks the second such meeting on the issue to be heard by the Senate, with the first meeting held last month.

The committee will investigate Rs 33-billion loss to the national funds due to changes in the tax structure by the previous government of Pakistan Muslim League-Nawaz Sharif (PML-N).

According to an audit report, the issue arose last year when two major industry players shifted their famous brands to the lowest slab and sold cigarettes with 50% reduction in federal excise duty, which boosted their sales but at the same time led to a decline in government revenues.

As of now, 86% of multinational brands were paying federal excise duty at the lowest rate as the FBR had failed to protect government revenues, as per the report.

If the trend continues, small manufacturers would be forced out of the market, causing the multinationals to be free to proclaim their own policies to the FBR, warned one of the officials.

According to sources, the FBR will highlight tax revenue details provided by the tobacco manufacturer during the last five years in the meeting to be held today. 

The FBR will also be responsible for providing facts to committee members regarding the raid conducted by its authorities on the illegal tobacco factories.

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