Automated clearance system to stay for two more months

KARACHI: Pakistan Automated Customs Clearance System (PaCCS) will continue to operate during the next two months during which the government would decide its fate, according to the Chairman Federal Board of Revenue, Sohail Ahmad.

Ahmad criticised the PaCCS system, stating that it had various loopholes due to which various fraud cases have been registered in the past few months. “The problems of PaCCS system are being examined and whatever the government decides with regard to the PaCCS; the FBR will implement it,” said Ahmad.

Ahmed was speaking to businessmen at the Karachi Chamber of Commerce and Industry (KCCI) on Thursday.

It had been decided earlier that the PaCCS would be shut down due to reports of the system being ineffective with deficiencies. The decision was taken by the Federal Board of Revenue due to a report generated by a chartered accountant firm.

The suspension and restoration of PaCCS system in June had delayed clearance of 14,000 imported containers and resulted in importers paying heavy amounts of container rent and other charges. The Kuwait-based company, Agility, which made the PaCCS system is reported to have not been paid by the Government of Pakistan and has been trying to get the government to pay its outstanding dues.

Afghan Transit Trade

The new Pakistan-Afghanistan transit trade agreement has not been signed yet. Only its minutes have been signed by the governments of Afghanistan and Pakistan, Ahmed said, adding that parliament and Prime Minister Yousaf Raza Gilani would have to endorse it eventually.

The new transit agreement has given no concessions to Indian traders and there is also no likelihood of smuggling of Indian goods into Pakistani markets, he said. He insisted that the transit agreement will benefit Pakistan in the long run as smuggling will decline and the country’s reach to Central Asia will improve.

Ahmad said that Afghanistan was a landlocked country deserving soft treatment and its government is all in favour of collective approach for the people of both countries.

FBR policies

Ahmad, when questioned about the FBR’s notices, said, “the FBR will continue its policy of cordial relations with taxpayers and FBR is not pursuing any policy of harassment.” However, he commented that despite the economic growth the tax-to-GDP ratio had not increased in the last seven years owing to the absence of self-assessment.

The FBR likes to continue its self-assessment policy along with desk scrutiny and audits which may create some problems for the taxpayers, he added.

About corruption in the FBR, he said that he had already sacked some officers whose corruption charges had been confirmed. “My message is clear to my colleagues, it is that the FBR will not tolerate corruption at any cost and some examples have already been set in which top officers were sacked in corruption cases.”

Reformed GST

On the question of reformed general sales tax (GST), Ahmad said that the FBR had no intention of bringing any hard-hitting document for taxpayers.

“Anything on reformed GST will first be tabled in parliament and the FBR has no intention of imposing anything on the taxpayers of its own accord,” he said.

The FBR is not going to hide anything from taxpayers, he said, adding that the government is assessing all the available options regarding the present General Sales Tax (GST) and the proposed reformed GST to come up with a best possible system.

Revenue target in 2010-11

The revenue target of Rs1,667 billion in the fiscal year of 2011 may be difficult to achieve but the FBR will take all possible measures to achieve the target. Pakistan cannot afford to let its revenue fall short in the coming years and it has to increase its revenue by Rs400-500 billion at least.

To meet the target, Pakistan needs to stop subsidies being given to five or six loss-incurring institutions to save around Rs200 billion. It then needs to increase tax collection by Rs250 billion in the current fiscal year to touch the mark of Rs400-500 billion.

Economic Adviser to Chief Minister Sindh, Zubair Motiwala, said that there has been a concern in the industry that what the government may do with zero-rated industries in reformed GST. Motiwala said that the brighter aspect of the new transit agreement between Pakistan and Afghanistan is that it would reduce present smuggling to 50 per cent from which at least Rs70 to Rs80 billion could be saved for the national exchequer.

He added that collection of tax at the Karachi port and then refunding it to Afghanistan while tracking the container movement till it reaches Afghanistan, opening of letters of credit (LCs) in Afghanistan and quantifying Afghan imports would help reduce smuggling to at least 50 per cent.

Published in The Express Tribune, July 23^rd, 2010.