Business

Under-invoicing to be curbed, say FBR officials

Pakistan decides to sign agreements with other countries regarding data sharing to arrest under-invoicing.

Irshad Ansari October 04, 2010

ISLAMABAD: Pakistan has decided to sign agreements with other countries regarding data sharing to arrest under-invoicing. These countries include the US, Turkey, Iran, China, Japan and various European countries.

According to a senior officer of the Federal Board of Revenue (FBR), similar agreements are already in place with Saarc countries, D-8 countries, China, the UAE, Iran, Turkey and the US amongst others. The officer explained that efforts are under way to honour these agreements effectively.

According to the FBR, the country lost around Rs150 billion due to under-invoicing of imported goods. This is a part of the Rs600 billion lost due to tax evasion at the border by under-invoicing and misuse of concessionary duties. The FBR also claims that the size of informal economy from these losses is Rs800 billion. Losses from tax evasion on imports from China weigh in at Rs200 billion, the largest contributors to the overall losses in federal revenue.

Sources added that negotiations are under way between the country and Japan and European countries to develop agreements for the prevention of under-invoicing.

An electronic data interchange is also under construction to provide regulatory authorities with information sharing capabilities and the State Bank has been consulted for the development of the interchange, said the officer. The database will be used for information exchange between banks and customs officials regarding imports.

The post-clearing audit system will also be made more effective to address issues of under-invoicing, said the official.

He explained that imported goods worth billions of rupees are currently being incorrectly declared which results in heavy losses in duties and taxation revenues and augment the economy’s informal sector.

An online custom valuation gateway has also been established by the FBR to aid custom officials in arresting under-invoicing. The gateway allows officials to check international prices of goods being imported and apprehend misrepresentations.

Published in The Express Tribune, October 5^th, 2010.

COMMENTS (1)

Meekal Ahmed | 13 years ago | Reply This over- and under-invoicing/misdecleration is done with the connivance of the authorities. We need to stop kidding ourselves. What they are doing now should have been done 20 years ago. However, new information systems and use of IT technology can give renewed impetus to efforts to stem (or at least curtail) this long-standing menace. But what about corruption? You can have the best systems in the world but they will prove unavailing unless you address the root cause of the problem as well. Many years ago, we gave this whole business to a Swiss firm that does this sort of work in many countries of the world. Unfortunately that contract turned into a scandal and implicated amongst others Mr. Z himself. We have a strong proclivity of turning good things/intentions into a scandal: IPP's, RPP's and so on.

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