FBR expects Rs6bn revenue from VAS installation in sugar mills

ISLAMABAD: The Federal Board of Revenue (FBR) is expecting to collect up to Rs6 billion a year from the installation of video analytics surveillance (VAS) systems at the sugar mills to check under-reporting in production.

The Economic Coordination Committee (ECC) had last Monday approved Rs350 million for the installation of VAS systems at the mills to monitor their operations and prevent tax evasion.

VAS is a system that monitors production through video cameras and weighing sensors. The system was introduced under an agreement signed by the FBR and Pakistan Sugar Mills Association in October last year. VAS installation will begin as soon as the legal process regarding licencing and import of surveillance devices is completed.

Millers say they have been notified that monitoring will start by the next sugarcane crushing season in the autumn.

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“Electronic monitoring system is expected before the start of next crushing season,” Sindh Abadgar’s Sugar Mills chief executive Tara Chand Essarani said. “Since the start of the crushing season from November 2020, representatives of FBR are already deployed in most of the mills.”

While the FBR is optimistic that the monitoring system will significantly contribute to state coffers, experts say that the real issues behind tax evasion are the agency’s inefficient law enforcement and connivance. According to experts, the FBR needs to improve human resources and counter tax evasion through technological intervention. “The tax evasion and/or avoidance is either due to inefficiency or corruption. The FBR first of all must put its own house in order,” they added.

An investigation report made public in May 2020 found that sugar mill owners had made a windfall profit of over Rs100 billion through acting as cartels, fudging the production cost to claim subsidies, underreporting their stocks and exploiting farmers.

Some 85 sugar mills are operational in Pakistan, mostly in Punjab and Sindh. Many of them belong to influential politicians and their families.

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