The current government in its resolve to steer the nation
towards economic viability and development on the basis of domestic revenue
resources and debt servicing has set a target of Rs. 5500 billion for the
Federal Board of Revenue in the current financial year. It is a herculean task
for the FBR to achieve due to the inaction of the government against the rampant
corruption, incompetency of the bureaucracy within FBR on one hand and on the
other hand the government`s failure to listen to the genuine demands of the FBR
officers. An attempt is made to find the reasons requiring immediate
rectifications / interventions in customs department due to which FBR is likely
to miss its revenue target for the year in the following paragraphs.
• Under invoicing:
It can be defined as the act or practice of stating the price of a good on an
invoice as being less than the price actually paid. Under invoicing occurs if
the importer and/or exporter wish to reduce a tariff or if a buyer and/or seller
wish to reduce their apparent profits so as to pay less in taxes. One of the
reasons of Pakistan`s negative trade balance is the under invoicing of exports
under which the exporter in abetment with the officials of the customs
department declare less value of exports enabling the exporter to park the
surplus undeclared profit in offshore. This transaction is rarely unearthed due
to the negligence of the commercial councilors posted in the diplomatic corps.
Thus the nexus between the exporter and the customs officials with the
negligence of the diplomatic corps deprive the state of Pakistan of the much
needed foreign exchange realized against exports. The revenue target of Rs. 5500
billion for the Federal Board of revenue during the current financial year would
remain a myth if this aspect of taxation remain ignored.
• Under valuation:
The appraisement collectorates in connivance with the importers tend to under
value the goods imported by commercial importers for collecting duties and taxes
lower than due on the goods imported. The same goods are sold in the market at
very high rates without value addition. Needless to mention that the appraiser
would not be rendering these privileged services to the importer without any
consideration. The revenue target of Rs. 5500 billion for the Federal Board of
revenue during the current financial year would remain a myth if this aspect of
taxation remain ignored.
• Under declaration:
The appraisement collectorate under the Weboc and Onecustoms system are found
involved in the under declaration of goods imported by an industrial undertaking
enabling them to avoid taxes due at the import stage and suppress production.
This nexus between the importer industrial undertaking and the appraisement is
doing double jeopardy to taxation. The revenue target of Rs. 5500 billion for
the Federal Board of revenue during the current financial year would remain a
myth if this aspect of taxation remain ignored.
• Bonded Warehouses:
A bonded warehouse is a building or other secured area in which imported
dutiable merchandise may be stored or undergo manufacturing operations without
payment of duty for up to 5 years from the date of importation. The officials of
the customs department in connivance with the manufacturers release huge
quantities of imported raw material stored in bonded warehouses. This is shown
as either wastage or is kept in the stocks in trade in the balance sheet of the
audited accounts of the manufacturer. The revenue target of Rs. 5500 billion for
the Federal Board of revenue during the current financial year would remain a
myth if this aspect of taxation remain ignored.
• Misuse of Afghan Transit Trade:
Pakistan has given transit facility to the imports and exports of land locked
Afghanistan. The goods in transit to Afghanistan are routed through Pakistan
without payment of duties and taxes. The goods in transit under the afghan
transit trade agreement in abetment with the officials of the customs department
are released to the markets in Pakistan without payment of duties and taxes. The
shops in Karachi, Lahore, Quetta and Peshawar are full of goods imported under
the Afghan transit agreement depriving the country of the revenue due in
addition to flourishing the informal economy. The revenue target of Rs. 5500
billion for the Federal Board of revenue during the current financial year would
remain a myth if this aspect of taxation remain ignored.
• Misuse of Green Channel:
Green channel is a route followed by passengers at an airport who have no
dutiable goods to declare. This facility is being misused by persons in
connivance with the officials of the customs department depriving the state of
the duties and taxes due on the imports. According to customs intelligence
report the goods imported under this facility were different than their
declaration in the import GDs. The revenue target of Rs. 5500 billion for the
Federal Board of revenue during the current financial year would remain a myth
if this aspect of taxation remain ignored.
• Import of vehicles:
The government has permitted import of vehicles under personal baggage, Gift
scheme and transfer of residence scheme for Pakistani nationals living abroad
including dual nationals. The car dealers in connivance with the officials of
the customs department misuse this facility by importing cars through the
passports of overseas labor hardly earn to meet their both ends meet. The
passport for the purpose of import is obtained on fifteen thousand rupees and
the amount for the purchase of car is remitted to Dubai through Hundi. The
revenue target of Rs. 5500 billion for the Federal Board of revenue during the
current financial year would remain a myth if this aspect of taxation remain
ignored.
• Auctions:
It is defined as a public sale in which goods or property are sold to the
highest bidder. The customs department is mandated to take cognizance of the
movement of non-duty paid goods and confiscate them. The bidders in the auction
of such goods is a ring which works in connivance with the officials of the
customs department purchasing goods confiscated at nominal prices and ensuring
that no genuine buyer appear in the bidding process. The revenue target of Rs.
5500 billion for the Federal Board of revenue during the current financial year
would remain a myth if this aspect of taxation remain ignored.
In a nutshell, the assigned budgetary target can be surpassed for the current
financial year if the government repair the dents and damages to the revenue
inflicted by the officials of the Federal Board of Revenue in addition to real
accountability of the corrupt and the inefficient. The proposed rectifications
would not only improve the balance of payment and balance of trade of Pakistan
but would also ensure development through domestic revenue resources.