ISLAMABAD: The Federal Board of Revenue (FBR) extended all-out cooperation in the preparation of Special Audit Report on the causes of decline in tax collection of tobacco sector. This special audit report had been compiled on the directions of the Public Accounts Committee of the Parliament.
An insider at FBR told Customs Today that FBR officials extended all-out cooperation to the auditors to the extent that Director General Inland Revenue himself led the audit party in the entire proceedings. Resultantly, the audit party was enabled to compile the report in such a short time.
As per shared information by FBR there are some 15 cigarette manufacturing units in Pakistan including two multinational companies (MNCs). These MNCs namely Pakistan Tobacco Company and Philip Morris Pakistan are key market share holders with 55% and 43% respectively in Pakistani market as well as key contributors to the revenue collection some Rs 60.62 billion in tax year 2016-17.
Therefore, the source said that the audit party kept their main focus on the sale/ purchase of both these companies because of their major share to gauge the benefit out of third tier of tax slab introduced in finance bill 2017. The audit party also consulted various study reports conducted by national and international organizations on this issue.
The insider said that FBR led party found that both MNCs paid some Rs 80 billion and Rs 86 billion as FED in tax years 2014-15 and 2015-16 respectively as well as Rs59 billion and 49 billion in tax years 201617 and 2017-18 on the basis of their sales turnover.
Interestingly, both the sales turnover and FED rose in the initial years but declined in the later years; however declining trend stared after 2015-16 for PTC and 2014-15 for PMP. However, during the month of June 2017, the declining trend of sales turnover suddenly improved by unusual percentage of 320 of PTC. Same was in the case of PMP where declining trend of sales turnover reversed to unusual percentage of 89.