NBR recommends banning cigarette paper import

Staff Reporter  :
The National Board of Revenue (NBR) has recommended imposing ban on commercial cigarette paper import in order to prevent tax evasion.
It requested the commerce ministry to take steps include bringing necessary amendment in import policy in line with banning the goods, according to a letter issued by the revenue board.
Cigarette paper is a special kind of paper which is not produced in the country and the sector is completely dependent on import to meet the country’s demand.
As per the existing rules, the cigarette manufacturers pay 172.20 per cent and commercial traders pay 212.20 per cent duties for importing the paper.
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.
Apart from this, the NBR officials think that revenue collection from the cigarette sector, around 28 per cent contribute to total VAT earning, would increase, if it is possible to avoid tax evasion from the sector.
“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 NBR.
“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 added.
Keeping the situation in mind, NBR recommended the commerce ministry taking initiatives to impose ban on commercial cigarette paper import and none but tobacco manufacturers should be allowed to import the papers, the official said. Besides, the NBR also initiated to develop automated system for monitoring the proper use of the papers so that no one can dodge VAT and other taxes on tobacco items.