Fashion industry comes under FBR scrutiny

Some brands are also accused of using smuggled fabric in their fashion lines

KARACHI:

The fashion industry has come under the scrutiny of the Federal Board of Revenue (FBR) following allegations of tax evasion and smuggling against some prominent fashion houses.

The Intelligence and Investigation FBR (I&I-FBR) has uncovered instances of tax evasion by several top apparel brands in the fashion sector. Shockingly, well-known fashion designers have been accused of withholding sales tax collected from their clients without remitting it to the FBR.

As per sources, I&I-FBR Karachi has filed a complaint against a prominent fashion designer who is accused of incorporating smuggled textiles into their clothing line. The accused is suspected of engaging in the forgery of sales tax invoices, leading to substantial losses for the national exchequer. Preliminary estimates indicate a revenue loss of approximately Rs140 million.

Upon the filing of the case, the accused fashion designer promptly paid surety bonds totaling Rs5 million in order to secure bail prior before arrest, according to the sources.

Furthermore, it has come to light that several top clothing brands and fashion designers in the country have been involved in fraudulent invoicing practices. I&I-FBR officials have uncovered instances of counterfeit sales tax invoices among other prominent fashion designers.

Following the Eidul Azha holidays, I&I-FBR officials are set to intensify their efforts to target tax-evading fashion designers. Sources within I&I-FBR have reported that reputable brands are resorting to the use of smuggled fabrics from China, primarily via Gilgit-Baltistan (GB), as well as from other parts of the world through Afghanistan, specifically via Peshawar’s Bara market.

Published in The Express Tribune, June 25^th, 2023.