Pakistan: FBR Modifies RFP for Tax Stamp & Supervision Project

Source from:  Business Recorder  04/08/2013

Federal Board of Revenue (FBR) has modified the Request for Proposal (RFP) for 'Tax Stamp and Supervision Project' relating to cigarette industry, as per the suggestions of Transparency International Pakistan (TIP).

The RFP is to set the specifications in order to get offers from qualified companies for the high security self-adhesive labels and related Track & Trace system tailored for country's needs.

TIP Adviser Syed Adil Gilani, in its letter sent to FBR on April 6 has, however, informed that the RFP was not correct, and "prima facie it appears to be oriented for one manufacturer only".

Adil Gilani said observations recorded in the vetted and amended RFP sent by TIP on March 30, should be used, as the suggested specifications are not restrictive, and all other manufacturers are allowed to participate in the bidding.

The observation of the Pakistan Tobacco industry shows the following facts: The estimation of total cigarette market is about 75 to 80 billion sticks per year.

Most of this market is already in the tax paying sector with two large players: PTC (with seven brands) and LTC (with 10 brands), and a galaxy of very small other brands and manufacturers which represents about one percent of these market. The total of licenced manufacturers is estimated to be 55.

The taxation scheme comprises three levels of taxes respectively: Tax Level A est.70 percent of the total, Tax Level B est. 20 percent of the total, Tax Level C est. 10 percent of the total.

The Government has to face revenue losses which are due to counterfeiting, smuggling and difficulties to monitor tax recovering in a universe of more than 400,000 points of sales plus other outlets. It has, therefore, decided to improve the control of the tax recovery and support the tobacco industry in its fight against counterfeiting and smuggling of their products.

In this respect it has been decided to implement a programme dedicated to authenticate, track and trace of the tobacco products. This will be accompanied by a dedicated law enforcement in order make this endeavour successful and perennial.

In order to achieve this goal and after studying the various possible solutions deployed in other countries and the advanced technologies available in the security industries, FBR has decided to implement a system based on high security self-adhesive labels combined with a state of the art Track & Trace system.

Purpose of the document:

The RFP includes; The design and development of tax stamp self-adhesive high security labels. The development, production, and maintenance of mobile authentication, and validation devices. The design, development, roll-out and maintenance of a tracking system to ensure monitoring:

All labels produced and affixed on cigarette packets and their association to their specific SKU and required production and timestamp.

All activities of Law enforcement officers such as all feedback statistical data's related to the controls and results of the controls, location of the controls, and all relevant related information in order to conduct law enforcement policy.

The scope of this programme will concern, the local production of tobacco products in a first stage and the imported cigarettes in an ulterior stage. Enditem