FBR Promises to Control Smuggling of IT Goods in Pakistan

The Senate Standing Committee on Commerce and Textille along with top officials of Federal Board of Revenue met with Mirza Muhammad Afridi, the chairman, joint conference revealed the sickening ongoing system of smuggling and under invoicing of information technology (IT) related goods and equipment are inflicting Rs 8 billion financial loss to national exchequer and money laundering of 400-500 million dollar.

This unpleasant situation emerged during briefing by the FBR chief (Exports) on under invoicing of IT equipment and subsequent loss to the exchequer. The issue of import of IT equipment has been under discussion in the committee for the last many months. Leader of the House Senator Shibili Faraz has been raising this issue for awhile.

Faraz on this situation commented that “how it is possible for an LC to be opened in the name of one person or company whereas the Bill of Lading (BL) is the name of another person/company and the consignment is cleared by the third party. According to him, invoices were forged with the help of FBR.”

Javed Bilwani, a top representative of exporters proposed that if Master Bill of Lading is made mandatory instead of House Bill of Lading, this issue will be resolved. He said, business community has already tabled this proposal. The committee also suggested Secretary Commerce to consider this proposal. He also accused FBR of shutting down the entire business due to a complicated refund form adding that only 40-45 exporters out of 300-400 have been given refunds. He stated that FBR’s mechanism is as complicated as India’s non tariff barriers to discourage Pakistani exports.

FBR’s Member Policy explained the steps being taken by the FBR to curb under invoicing of IT equipment which include specifications of each product along with its size. However, FBR officials acknowledged that there are issues of under invoicing and smuggling and presently 20-35 cases have been indentified for further probe. The committee was informed that the main issue of smuggling is lower duties in Afghanistan. They cleared, since August 2019, FBR has processed claims of Rs 263 million of which claims of Rs 220 million have been released out of total claims of Rs 1 billion received by the FBR.

Chairman Standing Committee argued that domestic industry is disturbed due to under invoicing and smuggling, adding that increase in import volume of Afghanistan indicates that goods are being flooded in Pakistani markets.

Anjum Nisar, one of the country’s top businessmen said that FBR should accept that there are loopholes in the system due to which facilities are being misused. He further stated that business community should be facilitated. The Standing Committee was further informed that business community is taxes  and import duty on dyes and chemicals was 19 per cent before federal tax which has now increased to 46 per cent.

On a query, Secretary Commerce Ahmad Nawaz Sukhera informed the committee that according to the import policy order, it is the responsibility of Commerce Division to devise a policy in consultation with the stakeholders. Secretary Commerce gave a commitment to the committee that he would bring all the stockholders on board and sort this issue out within 15 days.