Steel makers demand action against under-invoicing
PC is also considering initiating a process to make timely payments of basic salaries to thousands of employees. who have been made victims of the poor performance of the top PSM management. PHOTO: FILE
The delay in linking customs value with internationally published London Metal Bulletin on import and export of metals and metal scrap has throttled industrialisation process in Pakistan and encouraged mis-declaration of customs value, said Pakistan Association of Large Steel Producers (PALSP).
In a letter sent to Federal Board of Revenue (FBR) Chairman Muhammad Ashfaq Ahmed on Monday, the association alleged that trade criminals had become well-organised because of delay in implementation of effective counter-measures by the federal government.
PALSP Secretary General Syed Wajid Bukhari underlined in the letter that under-invoicing was being exploited by the organised criminal groups to facilitate a myriad of financial flows. “This creates a hostile trading environment that leads to de-industrialisation in the country,” he remarked. In fiscal year 2020-21, the loss of foreign exchange was over $255 million, Bukhari said, adding that the loss of revenue was over Rs2 billion per month.
He pointed out that the federal government had allowed Pakistan Customs to incorporate values from the internationally acclaimed publications, periodicals, bulletins or official websites of manufacturers or indenters through the Finance Bill. The Directorate General of Customs Valuation had issued valuation rulings linking customs value with the London Metal Bulletin for export of copper and import of metal scrap having copper content, he added.
The London Metal Bulletin - now Fastmarkets - was an international publication that provided data in light of transaction values quoted by traders for import and export of metals and metal scrap, Bukhari said. He said that London Metal Bulletin data had also helped Pakistan Customs to discover the actual composition of metal scrap and make effective determination of customs value. “Trade data shows a significant improvement in collection of revenue and foreign exchange on exports,” he added. Talking to The Express Tribune,
Topline Securities steel analyst Mehroz Khan said that under-invoicing was a ground reality and posed structural challenges. Even though crimes like smuggling and under-invoicing had been on the lower side during the tenure of current government, anomalies were still present, he said. “This shows that loopholes are in the system, where some people are taking unfair advantage,” he said.
“A structural change is required to provide a level playing field and halt tax evasion.” Karachi Iron and Steel Merchants Association President Shamoon Baqir Ali revealed that the customs had no right to fix value as per the World Trade Organisation, though it was the authority for checking under-invoicing.