Islamabad : Referring to alarming disclosure that Pakistan lost over Rs 2.2 trillion revenue in just last two years in flying invoices and under-reporting , Pakistan Polypropylene Woven Sacks Manufacturing Association (PPWSMA) has demanded of Federal Board if Revenue ( FBR) to ban commercial import of polypropylene to address the issue of tax evasion through flying invoices and under-reporting.
In a letter , PPWSMA chairman , Iskandar M Khan said FBR on July 25, 2025 testified before the Senate Standing Committee on Finance and Revenue that more than Rs2.2 trillion worth of tax evasion has taken place through “fake” and “flying” invoices over the past two fiscal years, highlighting the massive scale of loss of public monies due to weak enforcement.
Iskandar M Khan maintained that in the light of above, we document the following that will eradicate tax evasion and culture of flying invoices that take place because of the loophole in the taxation, coupled with weak enforcement that facilitates tax evasion.
The Polypropylene bags, an environment friendly packaging that is exclusively used for the industrial packaging, are produced from Polypropylene granules, basic raw material that is exclusively used by the polypropylene industries for producing industrial packaging of around 2.5 billion polypropylene bags per annum. Despite being an exclusive industry raw material, its commercial imports are allowed by extending tax incentives to the commercial importers, while, the industrial imports are burdened with multiple taxes.
Iskandar Khan added the commercial importers are supplying polypropylene raw material to the unregistered polypropylene manufacturers, who operate outside the formal tax net. These unregulated transactions bypass sales tax and income tax, and other statutory levies that would otherwise be collected on value addition of imported material. This results in under reporting of polypropylene bag production, being the main source of flying invoice. Beside this, industries that consumes un-declared polypropylene bags for their packaging, easily evades taxes by suppressing their production.
PPWSMA chairman said We, therefore, strongly recommend for following policy actions: –
a) Ban the Import of Polypropylene Raw Material by the Commercial Importers:
Only manufacturers with a valid industrial registration with FBR and compliance certifications should be
permitted to import PP raw material. This will discourage illicit production of polypropylene bags, and ensure adherence to taxation regulations.
b) There should be a mandatory printing of QR-Code on each and every polypropylene bag produced to document the economy through digital technology. Implementing our above said documented measures, will curb tax evasion, and ensure a level playing field for Polypropylene Industry that is registered with FBR, halt production of un-documented polypropylene bags that are supplied for industrial packaging that facilitates chain of tax evasion.
