ISLAMABAD: In a major effort to control tax evasion by the manufacturing sector, the Federal Board of Revenue (FBR) made it mandatory for manufacturers of dozens of locally produced products to install CCTV equipment at manufacturing premises to electronic control of the production of finished articles in real time.
The FBR issued an SRO 889 (I) 2010 to amend the rules for the sales tax, 2006, here Monday.
Manufacturers of the following products are required to install “intelligent video analytics” in their premises for electronic monitoring of production in real time: Fruit juices and vegetable juices; ice cream; water or carbonated drinks; syrups and squash; cigarettes; toilet soap; detergents; shampoo; toothpaste; Shaving cream; perfumery and cosmetics; tea; powdered drinks; milk drinks; toilet paper and tissue paper; spices sold in retail packages bearing brand names and registered trademarks; shoe polish and cream; fertilizers; cement sold in retail packages; mineral / bottled water; household appliances, including air conditioners, refrigerators, freezers, televisions, recorders and players, light bulbs, tube lamps, electric fans, electric irons, washing machines and telephone sets; household gas appliances, including gas stoves, ovens, geysers and heaters; foam or spring mattresses and other foam products for household use; paints, tempera, enamels, pigments, colors, varnishes, gums, resins, stains, glazes, thinners, blacks, lacquers and cellulosic polishes sold in retail packaging; lubricating oils, brake fluids, transmission fluids and other fluids for vehicles sold in retail packaging; accumulators other than those sold to automobile manufacturers or assemblers; tires and tubes except those sold to automobile manufacturers or assemblers; motorcycles; automatic rickshaw; cookies in retail packaging with a brand name; floor tile; automotive parts, put up for retail sale, other than those sold to automobile manufacturers or assemblers.
The RBF will issue a separate notification to specify the timelines for suppliers to install CCTV equipment at manufacturing facilities in these areas.
According to the new FBR rules, the provisions of these new rules will apply to video surveillance for electronic monitoring of production in real time.
The production of specified goods, made in Pakistan, must be monitored by intelligent video surveillance and video analysis by installing equipment, including video cameras, sensors, etc., on production lines, as approved by the Consulting for real-time data collection. which shows production by object detection and object counting; data transmission to the central control room of the RBF in real time, data storage and archiving; detection of unexpected shutdowns; quantitative analyzes of productions and data analysis for required legal actions.
The FBR further stated that no person engaged in manufacturing specified products should remove production from their business premises unless they have undergone the intelligent video surveillance process.
The FBR has stated that manufacturers of specified products will only purchase video surveillance equipment from the authorized vendor.
No manufacturer of the specified products should purchase video surveillance equipment, which is not authorized or approved by the board.
The FBR will set up an Approval Committee which will operate in accordance with the provisions of this Regulation.
The project manager will be the organizer of the approval committee and its headquarters will be at the FBR House, Islamabad.
The Board of Directors will provide the secretariat and any other related support required for the operation of the Approval Committee.
The accreditation committee develops procedures for its operation, which must comply with these rules.
The supplier must have and demonstrate the ability to provide high security and efficiency equipment for electronic production monitoring and real-time video analysis.
The equipment offered by the seller must have the following characteristics, including the equipment must have high definition video camera and sensor that can record and count production; the equipment must have the capacity to weigh the product contained in the bags; the equipment must be able to integrate with the software recommended by FBR which will be used for the transmission of data to the central control room; the equipment will perform video analyzes and communicate the results to the central control room (CCR); the equipment will signal any unauthorized production shutdown by generating an appropriate alarm; the system should have sixty days of local, on-site and Board-specified data storage, off-site, at each site, retrievable remotely; the CCR must have a central data storage capacity capable of storing and retrieving long-term data for up to five years and the equipment must be stable, fault tolerant, secure and accessible only by username and password password, as authorized by the Board.
The RBF said the IT team must develop software to run and operate the system, in accordance with Council requirements.
Equipment supplied by the supplier after integration with FBR software must be capable of performing the following functions, including the capability of real-time monitoring at plant premises or production lines; the possibility of configuring the production unit remotely; the system must be able to send alert messages and trigger alarms, visible and audible, in the event of the occurrence of abnormal events such as unauthorized production stoppages, temperaments with equipment and camera, etc.
The reporting system must be able to filter and process production data for statistical and analytical purposes and the system must ensure secure storage and archiving of data for five years from generation or recording.
The team must submit a complete list of operations, software and maintenance required to operate the equipment.
The authorization granted under this Regulation is not transferable and cannot be used by any subcontractor.
The vendor must also assist Pakistan Revenue Automation (Pvt) Ltd (PRAL) to install its software on the equipment and run the system during the license trial period.
The RBF IT team should ensure that each factory is connected to the system with adequate IT infrastructure required for real-time electronic production monitoring and periodic reporting.
The supplier must organize testing of monitoring equipment at each production site.
The manufacturer of the specified goods must make all production facilities available for the installation of the system and allow access to the vendor and the RBF for routine operations, inspection and maintenance; not to deliver goods without routing them through intelligent video analysis, be responsible for paying the fees agreed with the seller; be responsible for the proper functioning, protection and security of intelligent video analysis.
The manufacturer of the specified products must report to the Board of Directors and the relevant Inland Revenue Commissioner within 24 hours of any operational failure, damage, disruption or alteration of intelligent video analytics.
Provided that any damage to the system resulting from recklessness, negligence or willful action by the manufacturer is remedied at the expense of the manufacturer, without prejudice to any legal action that may be taken for the recovery of the tax evaded and the imposition of a penalty; allow unimpeded access to the RBF and any agent authorized as such; give notice to the Council, at least 30 days in advance, from the date of commencement of production of new brands of products, of expansion, of modification or of any other change in the production line; make damaged equipment, camera, etc. available for inspection by an officer authorized by the Inland Revenue Commissioner.
The FBR added that the seller will be liable to punitive action under the Sales Tax Act of 1990 and its rules, in the event of willful collusion with the manufacturer for violation or contravention of any of these provisions. .
The seller is also required to pay duties and taxes on deposit as well as surcharges and penalties under the Sales Tax Act 1990 and relevant rules, when established by procedure under the Law, after giving the opportunity to be heard, that the seller came to an agreement with the manufacturer, which resulted in an evasion of duties and taxes.
The RBF will arrange to audit the system every year.
The report should be used for system-related improvements and corrective and corrective actions, as appropriate, the RBF added.
Copyright Business Recorder, 2020