ISLAMABAD (Eshfak Mughal): After one year delay, the Federal Board of Revenue (FBR) has ope-rationalized the track and trace in Cement sector from18, 2023 to curb tax evasion from the industries.
Sources told the Voice of Public that the Board has directed manufacturers of the cement sector to start implementation of the Track and Trace system from 18-Aug-2023.
No cement bag will be permitted to leave a production site, factory, or manufacturing plant without the application of tax stamps/unique identification markings with effect from August 18, 2023’, sources added.
With assistance from its Licensee Authentix Inc., US, and consortium partners AJCL Private Limited and MITAS Corporation of South Africa, the FBR had been striving to implement the T&T solution in the Cement Sector by July 1, 2022.
According to sources, numerous successful demonstrations were conducted in multiple factories to demonstrate the performance of Track and Trace System. However, there were delays on the part of the cement manufacturers.
Almost 70% of the operational Cement plants are located in the North Region, while remaining 30% capacity is located in the South Region of the country.
According to All Pakistan Cement Manufacturers Association, Cement sector’s production capacity has surged to approximately 83.1 Million Tonnes.
Currently, there is 20% Customs duty, 6% additional Customs duty, Rs2kg FED and 18% Sales tax on finished cement products besides 11% income tax has also been imposed on cement sector.
Generally, Cement sector is organized and is oligopolistic in nature, with most of the players listed on the PSX, market capitalization of the sector was recorded around Rs 378billion in March 2023.
In FY22, overall sector gross revenues grew by 24% and were recorded at Rs 671bn.
As per a study conducted by a local institute, the cement sector achieved a gross profit of Rs 72 billion in the first half of FY23, with a pre-tax profit of Rs 49.7 billion.
Meanwhile, Pakistan’s per capita cement consumption is around 215 kg whereas world average per capita consumption is recorded around 550 kg, more than double the consumption in Pakistan, reflecting an immense potential for growth in cement demand.
In a recent report, a local NGO highlighted that the FBR’s Track and Trace system is yielding positive results. The digital solution has effectively limited illicit trade in the Tobacco sector to under 15%.
The Track and Trace System’s capability for real-time production monitoring offers a transformative shift from conventional retrospective auditing approaches.
The real-time production monitoring will enable the Tax Authorities to have access to current and comprehensive data which will facilitate proactive decision-making and ensures more accurate tax assessments. This centralized repository will provide Tax Authorities with unprecedented visibility into the sector’s production landscape.
The implementation of the Track and Trace System will not only encompass the Sector within the Track and Trace network but will also amplify revenue collection, thereby contributing to the national exchequer.