The National Board of Revenue wants to trace cigarette papers, which are imported by tobacco manufacturers and others, as the board suspects tax evasion with the illegal use of the papers.
To this end, NBR Chairman Abu Hena Md Rahmatul Muneem at a meeting on Tuesday asked the department concerned to come up with ideas about developing an application software for tracing the imported papers in real time.
The NBR meeting with its field-level officials at the NBR headquarters in the capital also reviewed the revenue collection situation of last month, several participants told The Business Standard.
The government's revenue collection slowed down in the month of September compared to that in the previous two months. Although VAT collection from local sources increased by 17% year-on-year during the month, the collection of import-level taxes, including VAT and customs duties, fell about 1.5%.
As the fall in revenue collection at the import level hit the country's overall revenue, the board emphasised increasing monitoring at the field-level and called for effective steps for preventing VAT and other tax dodging, the meeting participants said.
"The commercial import of cigarette papers is also allowed for the traders who are not involved in tobacco manufacturing, which is why we are unable to know whether the papers are used in a valid way or not," said a senior official at the Large Taxpayers Unit of the NBR, which collects the most VAT from the tobacco sector.
"Thus, we believe tax evasion is occurring with the imports of the cigarette papers. However, with the current traditional system, we are not able to trace the papers," he told TBS.
The revenue board should have a system for monitoring the proper use of the papers so that no one can dodge VAT and other taxes on tobacco items. "None but tobacco manufacturers should be allowed to import the papers."