KARACHI: The tax department has asked sugar mills to provide real-time access to video monitoring of crushing and other production processes in an effort to prevent tax evasion, it studied on Saturday.
The Karachi Large Taxpayer Office (LTO) directed the sugar factory to install video cameras to comply with mandatory online monitoring of production activities. They are required to obtain a video analytics system from an authorized vendor installed at their facility.
LTO Karachi has jurisdiction over 29 sugar mills for tax assessment. The application of a video analysis system for electronic monitoring of sugar production is mandatory for the 2020/21 crushing season.
In September, FBR introduced ‘video analytics rules for electronic monitoring of the production of certain goods’ through a statutory order. The following month, the Pakistan Sugar Factory Association (PSMA) signed a memorandum of understanding for the implementation of video analytics rules.
Video analytics technology has been introduced to monitor the production of certain items through high-tech video cameras to be installed in the sugar industry production lines.
“The introduction of the new technology will allow FBR to receive real-time video analytics data from production from its manufacturing sites and use it for tax collection purposes,” said an official at LTO Karachi. The video camera will capture information indicating production through object detection and counting, transmit data to the control room in FBR in real-time and detect unexpected downtime.
FBR intends to expand monitoring via video cameras to include the production and supply of other consumer goods included in the third timetable of the 1990 Sales Tax Act which covers goods sold in retail packaging on the open market. These items include fruit juices, ice cream, sparkling water / drinks, squash, cigarettes, beauty soap / shampoo / toothpaste / perfume / cosmetics.
A senior FBR official told The News last month that tax avoidance in the sugar sector was huge because large supplies were being made to the undocumented sector. Sugar mills, on the other hand, said they had borne additional sales tax costs of around Rs13 billion per year for two and a half years due to differences in tax rates.
“FBR officials are silent on the issue of fixing the price of sugar for sales tax even though the retail price of the commodity has skyrocketed,” said the anonymous official. “The sugar factory charges a sales tax of Rs60 per kg and deposits it in cash.” PSMA said the sugar industry had paid sales tax for a higher value in accordance with the law because no violations had ever been reported by the relevant tax authorities.