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Concern expressed over paper ISLAMABAD: A number of stakeholders, including international companies have raised concerns over the Federal Board of Revenue's (FBR) request for proposal for introduction of paper-based tax stamp to curb illicit trade in tobacco products in Pakistan. Some international companies have observed in communications to the FBR that the request for proposal seems to be highly focused on solutions that are based on the use of paper-based stamps, whereas they are convinced that the modern serialisation solutions will be a better option with a number of important benefits that the paper-based stamp solutions are unable to provide. The paper-based tax stamp solutions are more expensive and less effective than the modern solutions. The paper-based stamp system has been used in several countries of the world and has not helped tracking the origin of the cigarette pack throughout the supply chain, it said. The current tender process initiated by the FBR and the specified solution and requirements are solely focused on the use of paper-based stamps, showing that only one specific solution could meet the tender requirements as currently stipulated. This bears the high risk for the Federal Board of Revenue that there is not enough competition for the most effective solution possible - in terms of both functionality and the cost, it said. The paper-based solutions are unable to meet the objectives of the FBR as the paper-based stamps have proven to be ineffective in addressing today's illicit trade issues - no matter how sophisticated are the underlying security features. Furthermore, these are generally very expensive, require a high capital investment, and can easily be lost, stolen or counterfeited and require a complex process of manufacturing, distribution, storage and application. Sources said that many studies and researches conducted worldwide have pointed out that although the producers of paper-based tax stamps claim that they have developed fully functional tracking and tracing systems but upon closer examination it becomes clear that the systems only covers the aspects of authentication (fake or real products) and volume control (how much has been produced). These systems cannot track and trace the product throughout the several stages of the supply chain, ie, wholesalers, distributors, retailers and consumers, they said. The request for proposal as floated by the FBR does not respect the PPRA Rules 2004, in particular Rule 10 (Specifications), Rule 13 (Response Time) and Rule 15 and 16 (1) (Pre-Qualification Process).
