Pakistan’s tax authorities have taken another significant step toward modernizing tax collection by introducing electronic production monitoring for registered beverage manufacturers. The initiative is intended to improve transparency, reduce tax evasion, and strengthen documentation across the industry. However, one major concern continues to overshadow these efforts: a sizeable portion of the country’s beverage production reportedly comes from illegal and counterfeit factories that remain outside the government’s regulatory system.
According to recent reports, more than 30% of beverage manufacturing in Pakistan operates through unregistered or counterfeit facilities. Since these businesses function outside the formal economy, they are not covered by the Federal Board of Revenue’s (FBR) latest electronic monitoring framework, raising concerns about fair competition and revenue losses.
To improve oversight of the documented sector, the FBR issued Sales Tax General Order (STGO) 07/2026 under the Sales Tax Act, 1990. The order requires all registered beverage manufacturers, including toll manufacturers, to install an Electronic Production Monitoring System (EPMS) that records production activities and transmits data directly to the FBR in real time.
The new system uses advanced technology such as barcode scanners, product-counting sensors, industrial computers, programmable logic controllers (PLCs), IP cameras, network video recorders, and other monitoring equipment. Together, these tools allow tax authorities to track production volumes, identify unexpected interruptions in manufacturing, and analyze production trends using real-time data.
Only vendors approved by the FBR are authorized to install and maintain the monitoring equipment, ensuring that the system follows standardized technical requirements. Dedicated officials from the Inland Revenue department have also been assigned to coordinate the implementation process with manufacturers and service providers.
Tax professionals believe the digital monitoring initiative represents an important milestone in the FBR’s broader strategy to modernize tax administration. By capturing production data electronically, the authority expects to reduce under-reporting, improve compliance, and increase government revenue from one of the country’s major manufacturing sectors.
Despite these advancements, the biggest obstacle remains the illegal segment of the industry. Factories operating without registration or producing counterfeit beverages continue to avoid taxation and regulatory oversight. As long as these businesses remain outside the documented economy, the government’s electronic monitoring system will only cover part of the market.
Industry experts suggest that while digital monitoring is a positive development for registered manufacturers, stronger enforcement against illegal production units is equally important. Without bringing undocumented factories into the tax net, the government may continue to lose substantial revenue while compliant businesses face unfair competition from untaxed producers.
The success of Pakistan’s digital tax reforms will therefore depend on two parallel efforts: ensuring accurate production monitoring for documented manufacturers and strengthening enforcement to identify and eliminate illegal beverage factories. Together, these measures could help create a more transparent, competitive, and accountable manufacturing sector while boosting the country’s tax revenues.