FBR, U.S.-led consortium dispute expiry of Pakistan track-and-trace contract
Pakistan’s Federal Board of Revenue (FBR) and a U.S.-led consortium operating the country’s Track and Trace (T&T) system are in dispute over the expiry date of a contract covering the tobacco, cement, sugar and fertiliser sectors, officials familiar with the matter said.
The disagreement centres on whether the contract period should be calculated from the date it was signed in 2021 or from when the monitoring system became operational in each sector after delays caused by litigation and operational constraints.
The contract, originally set to expire in 2026, has prompted the FBR to seek legal guidance from the Ministry of Law and Justice on how the expiry date should be determined.
According to officials, the Law and Justice Division has advised the tax authority that the contract timeline could be adjusted to reflect the effective operationalisation dates of the system across the four sectors.
Pakistan introduced the Track and Trace system to digitally monitor production in selected industries in an effort to curb tax evasion and illicit trade.
However, implementation timelines differed across sectors due to legal challenges and operational delays.
In the tobacco sector, the system’s implementation date was set as July 1, 2021, but the “go-live” stage occurred about a year later in 2022.
Similarly, in the cement sector the system’s operational date is April 2024, which could extend the contract period to 2029 if calculated from the start of full implementation rather than the signing date.
Legal experts familiar with the agreement say delays that were not attributable to the licensee should be factored into the contract timeline.
They argue that the integrated T&T system covering all four sectors should remain operational until 2029 if the contract duration is calculated from the effective operational dates.
The issue comes at a time when the FBR is reviewing production monitoring mechanisms after problems with a video-based counting system that officials say lacks traceability and does not adequately capture illicit or counterfeit production.
The tax authority has recently sought information from technology providers on production monitoring and track-and-trace solutions, signalling a renewed policy focus on the T&T system.
Officials say uncertainty surrounding the contract timeline could raise concerns among foreign investors involved in technology and compliance projects with the Pakistani government.
It remains unclear whether the FBR will formally revise the contract timeline in line with the legal advice or seek a new arrangement with the licensee.
