Pakistan’s efforts to bring undocumented manufacturing into the formal economy have generated additional tax revenue, Federal Minister for Information and Broadcasting Attaullah Tarar said at the SDPI Conference 2026.

Speaking during a session titled “Rethinking Development in the Post-truth Era”, Tarar described the initiative as a locally driven economic agenda aimed at improving tax compliance and expanding the formal sector.

He said some large manufacturers collected sales tax from consumers but under-invoiced their products and failed to declare their full production capacity.

Digital monitoring helps track sugar production

Tarar said the government had introduced camera-based monitoring at sugar mills to improve transparency and track production.

“On every sugar mill’s production unit a camera has been installed showing how many bags are being produced, and on the bag there is a QR code showing where it is going and where it is being sold. Because of the Prime Minister’s intervention, in one year Rs60 billion extra sales tax was collected from the sugar industry,” he said.

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According to the minister, the government is extending the monitoring approach to the cement, textile and beverage industries.

Government targets undocumented tobacco production

Tarar also discussed efforts to bring undocumented tobacco manufacturing into the tax system.

He said the formal tobacco sector pays between Rs150 billion and Rs200 billion in annual taxes. However, he alleged that an undocumented segment operated hidden factories, cultivated tobacco and manufactured cigarettes outside the formal system.

“There is a formalised sector of tobacco which is paying a tax of Rs150-200 billion per year. And there is an undocumented sector which has hidden factories, is cultivating tobacco itself, making cigarettes and selling them. Now all of that has been brought under the tax net. And such operations have been conducted that you will be astonished,” he said.

The supplied figures also put the annual revenue loss associated with undocumented tobacco trade at an estimated Rs300 billion. This estimate requires confirmation from an official or independent source.

Formalisation aims to broaden the tax base

Bringing undocumented production into the formal economy can expand the tax base and improve compliance. It may also help create fairer competition between registered manufacturers and businesses operating outside the tax system.

An economic analyst cited in the supplied statement said addressing under-invoicing and parallel manufacturing could strengthen government revenues without increasing the burden on ordinary consumers.

The reported revenue gains and the expansion of monitoring systems will be important indicators of the government’s progress in formalising manufacturing and improving tax collection.