ISLAMABAD: Pakistan Polypropylene Woven Sack Manufacturers Association (PPWSMA) has urged the Federal Board of Revenue (FBR) to strengthen tax collection by implementing the recommendations of the Federal Tax Ombudsman (FTO).
In a letter to FBR Chairman Rashid Langrial, PPWSMA Chairman Iskandar Khan cited the FTO’s order aimed at broadening the tax base and curbing evasion.
The Association noted that the polypropylene industry manufactures woven sacks for industrial and commercial packaging from imported industry-specific polypropylene granules.
However, commercial importers enjoy tax concessions on importing this raw material, which they mostly supply to unregistered polypropylene factories. This practice allegedly promotes tax evasion through “flying invoices” — enabling underpayment of sales tax on one hand, while also allowing untaxed production of sacks supplied to industrial and commercial users.
Appearing before the Senate Standing Committee on Finance and Revenue, FBR Member Hamid Ateeq Sarwar testified that more than Rs873 billion worth of fake and flying invoices were unearthed last year, in addition to Rs1.37 trillion the previous year — taking the total to Rs2.25 trillion in just two years.
The Association argued that mandatory QR-code printing on polypropylene sacks, linked to the FBR portal for real-time data, would help document unregistered factories and their end users.
For his part, FBR Chairman Rashid Langrial acknowledged that Pakistan faces sales tax fraud exceeding Rs700 billion annually — far higher than other countries. He noted that although improvements in the system have been made, complete elimination of sales tax fraud remains unlikely.
In light of FTO recommendations and ongoing tax challenges, PPWSMA proposed two measures: (i) ban on commercial imports of polypropylene raw material — only manufacturers registered under the Sales Tax Act, 1990 should be allowed to import; and (ii) mandatory QR-code printing — all polypropylene sacks in the specified goods list under Sub-Rule 150ZF of the Sales Tax Rules, 2006 should carry QR codes to document unregistered factories and industrial/ commercial consumers that facilitate tax evasion.
Copyright Business Recorder, 2025
