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pAKIStAN’S fIRSt INdeptH NewSpApeR ON CuStOMS

vol 2 Issue No. 21

Karachi, tue june 10 - Mon june 16, 2014

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Regd. No, MC-1381

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expANdINg tAx Net

A new scheme for retailers has been drafted in consultation with relevant trade bodies as only a few thousands out of 2.5 million retailers across the country are registered, says Dar. | See pAge 03 | RejuveNAtINg CuStOMS

Pakistan Customs is in dire need of fresh blood to rejuvenate it as sta shortage has hampered anti-smuggling and enforcement activities, says Chief Collector Rozi Khan Burki. | See pAge 06 |

StAggeRINg Rs10,995m SHORtfALL

MCC Port Qasim deals huge blow to FBR revenue target

MISSINg tARgetS

the Collectorate collected Rs4,880m in share of customs duty against the target of Rs8,790m MCC Appraisement-West collects Rs16,714m in the month of May against its set target of Rs22,787m with a shortfall of Rs6,073 million. | See pAge 05 | RegISteRINg SHORtfALL

MCC Appraisement-East collects Rs14,863m in the month of May against its set target of Rs21,584.6m with a shortfall of Rs6,721.5 million. | See pAge 05 |

KARACHI

SOHIAL RAB KHAN www.customstoday.com

odel Customs Collectorate of Port Qasim once again fell short of its revenue target by Rs 10,995 million for the month of May, 2014 as it collected only Rs 22,613 million against the set target, dealing a huge blow to FBR revenue target.

FBR had set a revenue target of Rs 33,608 million for the month of May in share of different taxes including customs duty, sales tax, federal excise duty and income tax. As per ofOicial documents received by Customs Today, MCC Port Qasim collected Rs 4,880 million in share of customs duty against the target of Rs 8,790 million with a shortfall of Rs 3,910 million. Similarly, MCC Port Qasim

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managed to collect Rs 14,861.5 million in share of sales tax against the set target of Rs 20,300 million with the difference of Rs 5,438.5 million.

MCC Port Qasim collected a sum of Rs 207.6 million in share of federal excise duty against the target of Rs 288 million with a shortfall of Rs 80.4 million. The collectorate collected revenue of Rs 2,663.7 million in share of income tax against the target of Rs 4,230 million registering a deOicit of Rs 1,566.3 million.

It is pertinent to mention here that MCC Port Qasim has remained behind its set revenue target in the second consecutive month during the last quarter of the fiscal year 2013-14 as in

the month of April 2014, the collectorate had collected an amount of Rs 20, 255.5 million all together against a set target of Rs 30,719 million in the share of customs duty, sales tax, federal excise duty and income tax.

The Collectorate had collected an amount of Rs 4,170 million against the target of Rs 7,709 million in share of customs duty in April, 2014; Rs 13,643 million against target of Rs 19,700 million in share of sales tax and Rs 2,221.5 million against the target of Rs 3,090 million in the share of income tax. However, MCC Port Qasim managed to collect Rs 220.5 million in share of federal excise duty with an increase of Rs 0.5 million in April, 2014.

02

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NATIONAL

JUNE 10 - JUNE 16, 2014

Customs foils bid to smuggle foreign currency worth Rs53m to dubai

LAHORE: Customs Investigation and Prosecution Wing has foiled a bid to smuggle foreign currencies at the Allama Iqbal International Airport. Two accused were attempting to smuggle the currencies to Dubai. Foreign currencies including Saudi Riyals, UAE Dirham, Euro and others worth Rs 53,478,000 in the local market were recovered. Customs officials arrested two persons while registering an FIR. Customs Court sent one into judicial custody while granted two-day remand of the other.

Customs duty on import of used vehicles up to 1800cc increased ustoms duty on import of used vehicles has been increased up to ten per cent in the Budget 2014-15 as presented by the Finance Minister Ishaq Dar. The new rates of customs duty on the import of used vehicles as issued in the Finance Bill 2014-15 are increased from $ 4400 to $ 4800 on import of used vehicles up to 800cc; from $ 5500 to $ 6000 on import of used vehicles from 801cc to 1000cc; from $ 11,000 to $ 12,000 on import of used vehicles from 1001cc to 1300cc; from $ 15,400 to $ 16,900 on import of used vehicles from 1301cc to 1500cc; from $ 18,700 to $ 20,500 on import of vehicles from 1501cc to 1600cc; and customs duty has been increased from $ 23,100 to $ 25,400 on import of used vehicles from 1601cc to 1800cc.

These rates have been specified for Asian makes only but excluding jeeps. Last year, the exemption of duty and taxes was restricted up to 2500cc which resulted in negligible import of HEVs above 2500cc.

Therefore, it is proposed that the concession on imports of HEVs may be further rationalised. —CT Report

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Variouschangesmade inCustomsAct1969 arious changes have been undertaken in the Customs Act, 1969 under Budget CustomsTaxation.

In section 2, clauses (k) and (m) have been merged in a single definition of ‘customs-station’while in section 7, word ‘Central Excise’is substituted with the word ‘Federal Excise’. In section 18, new subsection 1A is inserted to add the Fifth Schedule to the Customs Act, 1969.

In section 18A the word‘Central Excise and Salt Act, 1944’is substituted with the words‘Federal Excise Act, 2005’. To ensure rational applicability of valuation data in cases of imported goods, clause (d) of subsection (5) of section 25 is omitted.

Resultantly, reference to clause (d) in sub-section (6) is also omitted.The word ‘taxes’is inserted in sub-sections (2), (3) and (3A) of section 32 to recover nonlevied and short levied taxes.The words ‘taxes and other charges levied thereon’is inserted in sub-section (3) of section 80 to replace‘taxes and other charges on reassessment of goods’. For uniformity of the two provisions in subsection (1), the words‘taxes and other charges levied thereon’is inserted. Under the Control of Narcotics Substances Act, 1997 cases involving narcotics and narcotic substances are to be tried in Special Courts created under the said Act. Necessary changes are made in section 185B. In Sub-sections (3) of section 194 the words‘Customs and Excise Group’are proposed to be substituted by‘Customs Service of Pakistan’ in line with section 202B. —CT Report

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Budget 2014-15

Budget envisages Rs246.255b new tax measures ISLAMABAD

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he government has taken new taxation and administrative measures with the aim to fetch revenue to the tune of Rs246.255 billion in the Oiscal year 2014-15 to be started from July 1.

According to the budget documents, these measures include an increase for advance tax rates for noncompliant taxpayers, imposition of 5 percent sales tax on 35 to 40 items including plant/machinery, regulatory duty on luxury goods, 1 to 2 percent adjustable advance tax on purchase of immovable property, 7.5 percent advance tax on domestic electricity consumers (with monthly bill above Rs100,000), abolition of income support levy on movable assets and reduction in maximum rate of duty from 30 to 25 percent.

As per details, the Federal Board of Revenue has proposed revenue generation measures for Rs231.255 billion and administrative measures of Rs15 billion. The FBR has taken relief measures of Rs12.040 billion. Out of Rs231.255 billion new taxation measures, direct taxes measures of Rs149.200 billion have been taken in the new budget. Sales tax and federal excise duty measures totalled Rs47.700 billion. The taxation measures of customs duty totalled Rs34.356 billion.

The relief measures taken on the customs duty side totalled Rs1.740 billion; sales tax Rs2 billion and relief measures pertaining to income tax stood at Rs8.3 billion for 2014-15.

The increase in rates of advance tax for non-compliant taxpayers will generate Rs14 billion. The govern-

ment will generate Rs3 billion from 7.5 percent advance tax on domestic electricity consumers having monthly bill above Rs100,000.

To penalise un-documented persons, the government has imposed an advance adjustable income tax, in addition to the tax collectable from return Oilers, be collected from persons who do not Oile income tax returns on certain transactions at rate of 5 percent for dividend income, 5 percent for interest income above Rs500,000, 0.2 percent for cash withdrawals from banks and 0.5 percent in case of advance capital gain tax collected from seller of immovable property.

Through Finance Bill (2014-15), the government has imposed 17 percent standard rate of sales tax on rapeseed, sunOlower seed and canola seed, 5 percent sales tax on oilseed for sowing, and raw and ginned cotton, withdraw 10 percent Federal Excise Duty (FED) on locally manufactured motor vehicles exceeding 1800cc and sales tax exemption to high efOiciency irrigation equipment and greenhouse farming equipment.

The government has reduced corporate tax rate from 34 to 33 percent for Tax Year 2015, causing revenue loss of Rs7.7 billion. To attract, Foreign Direct Investment, generate employment and attract inOlow of foreign exchange in Pakistan, the corporate tax rate is to be reduced to 20% if the investment is in a new industrial undertaking to be set up by 30.06.2017 and at least 50% of the project cost including working capital is through FDI as equity.

The rate of capital gains tax was to

increase from 10% to 17.5% with effect from July 1, 2014. In order to avoid a sharp increase in rate which might nega-

proposed that an adjustable advance tax be collected on purchase of immovable

tively affect markets, the rates have been rationalised, and the CGT rates are proposed to be 12.5% for securities held up to 12 months and 10% for securities held for a period which is between 12 to 24 months.

To document and bring into tax net the real estate transactions, it is

property at the rate of 1% tax for complaint taxpayers and 2 percent for non-compliant persons.

The measure is expected to generate Rs10 billion. However, property with value less than Rs3 million and schemes introduced by the government for expatriate Pakistanis will be excluded.

Similarly, the government will not charge 19.5 percent federal excise duty on telecom services in provinces, which are charging 19.5 percent sales tax on such services.

The Sindh, Punjab and KP will charge 19.5 percent sales tax on telecom services whereas FBR will not charge 19.5 percent federal excise duty on these services to avoid double taxation.

AroundRs4000mrevenuelosstoFBRonDTREviolation KARACHI

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akistan Customs, on the directives of Federal Board of Revenue, has started to work out on a data of importers and exporters who have been taking undue exemption of Duty/ Taxes Remissions on Exports (DTRE) in importing and exporting their consignments during the period from July, 2011 to December, 2013.

Sources in Pakistan Customs informed Customs Today on condition of anonymity that the department is going to make a list of those importers/exporters who have been involved in becoming beneOiciary of taking undue exemptions of DTRE in their import and export consignments during the aforementioned period while incurring

colossal loss to national exchequer by not fulOilling the terms and conditions of value addition. The sources conOirmed this scribe that FBR was facing loss worth millions of rupees due to less value addition on export consignments during the period from July, 2011 to December, 2013. They further revealed that Pakistan Customs has pointed out 37 companies so far, which are involved in violation of DTRE, adding that further working on the data was underway.

According to sources in Pakistan Customs, Alpha Industrial, Arabian Textile Mills, Array Pak Sports International, Ashraf Match (Pvt) Limited, Cider Foods (Pvt) Limited, Colaro Sports, Comfort Knitwear (Pvt) Limited, Crescent Bahuman Limited, Engro Polymer & Chemicals Limited, H Nizam Din & Sons (Pvt) Limited, Helicon Enterprises, Herbion Pakistan (Pvt) Limited, HNR Company (Pvt) Limited, Hussain Can Company

Customs has pointed out 37 companies involved in violation of dtRe

(Pvt) Limited, International Textiles Limited, Keystone Enterprises (Pvt) Limited, Khaleej Trading, Lal Industries, Libermann International, Lucky Plastic Industries (Pvt) Limited, M/s Afroze Textile Industries (Pvt) Limited, Master Textile Mills Limited, Nafees Polypack (Pvt) Limited, New-ways Industries, Nigar Apparels, Noorani Plastics, Oberthur Technologies Pakistan (Pvt) Limited, Pak Suzuki Motor Company Limited, Pro-tech Leather Apparel (Pvt) Limited, Qadbros Engineering (Pvt) Limited, Rajco Industries, Roshan Packages (Pvt) Limited, Shamsi Pakistan (Pvt) Limited, Six star sports works, Star Pak Martial Arts (Pvt) Limited, Tesla Industries (Pvt) Limited, Universal Trading & Commodities were initially involved in violation of DTRE. Around four thousand million rupees revenue loss is reported in violation of DTRE during the period.

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ISLAMABAD 03

JUNE 10 - JUNE 16, 2014

Customs foils bid to smuggle over 15000kg plastic granules

MULTAN: Customs Intelligence has thwarted an attempt to smuggle 606 bags of plastic granules from Quetta to Lahore worth Rs 3.5 million. The levy able duties/taxes were Rs 1.8 million. Anti smuggling squads of Multan, Dera Ghazi Khan and MCC Multan, on receiving a tip-off intercepted a truck loaded with 15150 kg Polyethylene and stopped it on road for search when unidentified persons resorted to firing. They snatched the truck and drove it away. After a while the truck was found abandoned on Muzaffargarh-Jhang Road.

Budgetarymeasurestoourishtaxculture:Dar ISLAMABAD

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inance Minister Ishaq Dar categorically declared that the government was committed to ending the culture of non-Oiling of income tax returns in the country for which tax rates have been enhanced for the non-compliant taxpayers and new scheme has been announced for retailers.

Addressing a post-budget press conference, the Finance Minister said that major budgetary measure is to convince the non-registered persons to voluntarily Oile their income tax returns. A new scheme for retailers has been drafted in consultation with relevant trade bodies of retailers. Out of 2.5 million retailers across the country, only a few thousands are registered with the tax department. The small retail outlets totalled about 1.5 million in the country and documentation of retailers will considerably expand the tax-base.

Certain retailers are afraid of the Federal Board of Revenue (FBR) or other want to pay tax without direct interaction with the tax department, he remarked. Under the new scheme, the tax department would compulsorily register chain stores, shops in airconditioned buildings and those accepting credit and debit cards. It has been decided to introduce a two-tier regime for sales tax. The Oirst tier will comprise retailers who are part of national or international chains, or are located in air-conditioned shopping malls, or have credit or debit card machines, or having electricity bill exceeding Rs50,000 per month for the past 12 months. They will be required to pay sales tax under the normal regime and to install Electronic Cash Registers. The remaining retailers will

— Exclusive Customs Today photos

fall in second tier, who will be charged sales tax through their electricity bills at the following rates: 5 percent of monthly electricity bill of up to Rs20,000 and 7.5 percent of monthly electricity bill of above Rs20,000. He encouraged general public to obtain receipts of purchases made from retail outlets. The government would announce a lottery scheme for offering prizes through a computer draw.

Dar dispelled the impression that taxation measures have impact on the general public. He said taxes have not been imposed on items consumed by the masses and cost of non-compliant taxpayers who are purchasing expensive properties and travelling aboard but not ready to come into the tax net has been increased. He said the inOluential people had obtained SROs for tax exemptions in the past, resulting

in massive corruption. The additional tax revenue worth Rs231 billion envisaged in the budget for the next Oinancial year would not impact the common man. He said the government has embarked upon a programme to phase out discriminatory SROs in three years as some inOluential people had squeezed unnecessary concessions against standard rates of duties, which also bred corruption.

He pointed out that elimination of some SROs next year would help raise additional revenue of Rs103 billion.

He said the remaining tax would be realised from new taxpayers. About the revenue impact of budget, he said that the withdrawal of exemptions through SROs would have a revenue impact of Rs103 billion whereas the imposition of taxes has a revenue impact of Rs128 billion.

Responding to reports regarding increase in prices of cement due to recent change of taxes on commodity, he said the budgetary proposals contain no measure that could lead to increase in prices of cement. The government would not allow cement manufacturers to create artiOicial price-hike.

He also warned the proOiteers and hoarders that the government would not allow anybody to increase prices of commodities in the name of Finance Bill or budget. The government would take strict action against the proOiteers, who would use the name of budget or Finance Bill to raise prices. It is the responsibility of the state to keep check on prices of essential items and commodities after every budget.

About telecommunication services, Ishaq Dar said that sales tax on services is the right of provinces.

The government will not charge 19.5 percent federal excise duty on telecom services in provinces which are charging 19.5 percent sales tax on such services. Sindh, Punjab and KP would charge 19.5 percent sales tax on telecom services whereas the FBR will not charge 19.5 percent FED on these services to avoid double taxation. The FBR has reduced FED on telecom services from 19.5 to 18.5 percent for Islamabad and Balochistan province. The government has also announced a reduction in the rate of withholding tax on cellphone charges from 15 percent to 14 percent.

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04 NATIONAL

JUNE 10 - JUNE 16, 2014

Customs discovers abandoned gold in Bangladesh aircraft

DHAKA: Customs officials at Shahjalal International Airport have seized 48 gold bars, apparently abandoned, from the cargo hold of a plane of the Biman Bangladesh Airlines. Customs officials said that they raided the aircraft arriving from Dubai. The gold bars weighed 5.5 kg and valued 25 million Taka. More than a month ago, Customs officials had found 936 gold bars, weighing 106 kilograms, abandoned in the toilet of an aircraft of same airline that had returned from Dubai.

Hardtarget:Rs1.25btobe recoveredinonemonthin Gujranwalaregion SIALKOT

ZAfAR MALIK

www.customstoday.com ederal Board of Revenue has recovered as many as Rs 8.9 billion as taxes out of its total recovery target of Rs 10.15 billion during the current fiscal year in Gujranwala region. Recovery of Rs 1.25 billion is still to be made during the month June 2014 As many as 13 special recovery teams were striving under the FBR’s special taxes recovery plan.

According to senior FBR officials in Gujranwala, FBR had to recover Rs 5.83 billion in share of income tax, Rs 4.28 billion in share of sales tax, Rs 35 million in share of federal excise duty.

Out of aforementioned amounts FBR had recovered around Rs 5 billion as income tax, around Rs 3.90 billion as sales tax.

Arrears were still to be recovered, as the FBR was also recovering millions of rupees from the different defaulter governmental departments including Gujranwala Electric Power Company (Gepco).

Interestingly, FBR has issued the recovery notice to as many as 100 government departments and private industrial factories in Gujranwala region alone for this purpose, asking them to ensure the early deposit of their outstanding dues. Otherwise, they should get ready to face strict action under the FBR Rules.Warning includes that their bank accounts could also be frozen if they did not deposit their dues.

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FBRcollectsRs212b againsttargeted Rs219binMay he Federal Board of Revenue (FBR) has provisionally collected Rs212 billion in May 2014 against Rs176 billion in the corresponding period last year, reflecting a growth of over 20 percent.

As per details, the FBR has provisionally collected Rs212 billion in May 2014 against the monthly target of Rs219 billion, reflecting a shortfall of Rs7 billion. It is to be noted that the tax authorities are expecting to collect Rs2,270 billion to Rs2,275 billion by the end of current fiscal year.

The FBR is facing serious difficulties in meeting its revenue collection target during the last quarter (April-June) of 2013-14. The FBR had collected Rs1,575 billion as provisional collection during the first nine months of 2013-14, showing a growth of 16.4 percent over the corresponding period of last year. The tax collection during July-April 2013-14 was Rs1,743 billion while it was Rs1,509 billion in 2013 for the same period.

The tax collection target was fixed at Rs 2,475 billion for 2013-14 at the time of budget. The FBR’s annual revenue target for 2013-14 was downward revised to Rs2,345 billion which requires a growth of 20.5 percent over the actual tax receipts of Rs1,946.4 billion during 2012-13. The target was further slashed to Rs2,275 billion for the corresponding period. —CT Report

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duty concessions

SROs withdrawal sees to generate Rs32b ISLAMABAD

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BR will generate Rs32 billion through the withdrawal of duty concessions under SRO 567(I)/2006, SRO 567(I)/2006 and SRO 565(I)/2006 as well as reducing maximum customs duty rate from 30 to 25 percent, bringing down general tariff slabs from 7 to 6 in Pakistan Customs Tariff (PCT).

According to the revised customs tariff issued here, the government has announced reduction in the maximum tariff having revenue impact of Rs1.5 billion. The zero percent customs duty slab in tariff has been substituted with one percent. However, items considered socially sensitive are proposed to be maintained at zero percent duty through inclusion in Fifth Schedule to the Act. The revenue impact of the measure is Rs500 million.

The exemptions and concessions allowed under various SROs have been reviewed to minimize exemptions. Concessions considered nonessential, and to be minimally utilised be withdrawn. Concessions considered socially sensitive to be retained. Essential concessions retained on enhanced concessionary rates by incorporating them in newly added Fifth Schedule to the Customs Act. The FBR has introduced major changes in SRO 567(I)/2006 and concessions to 7 sectors having import value below Rs30 million annually, and to sectors categorised as non-essential, are proposed to be withdrawn by shifting to normal tariff rates. The concessions to 25 sec-

tors considered essential are recommended to be retained on proposed rates by shifting to Oifth Schedule to the Act subject to the condition that the goods are ‘not locally manufacture red.’ The revenue impact of the proposal is Rs12 billion. Under SRO 567(I)/2006, the concessions to 95 items having import

the govt announces reduction in the maximum tariff having revenue impact of Rs1.5 billion. the zero percent customs duty slab in tariff has been substituted with one percent

value below Rs30 million annually are proposed to be withdrawn. The concessions to 11 items considered socially sensitive are proposed to be retained by shifting to Fifth Schedule to the Act. Concessions to 24 items considered non-essential are proposed to be withdrawn by bringing them under normal tariff rates. Concessions to 43 items considered essential are recommended to be retained on proposed rates by shifting to Fifth Schedule to the Act. The revenue impact of the measure is Rs9 billion.

Under SRO 565(I)/2006, the concessions to inputs of 89 products

having import value below Rs30 million annually are proposed to be withdrawn. The extent of concessions on inputs to 62 products is proposed to be reduced. However, these concessions shall be subject to the condition that the inputs are not manufactured locally. Concessions to inputs of 6 products are proposed to be continued. The revenue impact is Rs 11 billion. Through Finance Bill, the networking equipments are intermediary and Oinished goods. At present customs duty rates on these equipments are not based on cascading principle. Therefore it is proposed that customs duty on networking equipments may be rationalised.

The Olat rolled products of alloy steel PCT codes 72.25 and 72.26, attract customs duty @0 percent and 5 percent respectively, whereas Olat rolled products of non-alloy steel are subject to 10 percent customs duty. For avoiding misdeclaration and lab test, it is proposed that customs duty on Olat-rolled products of alloy steel (PCT codes 72.25 and 72.26) may be increased from 0 to 5 percent to 10 percent to bring them at par with Olat-rolled products of non-alloy steel.

However, concession to fan industry at 0 percent shall be maintained by including the product in survey based SRO. The government also has rationalised the exemption of duty and taxes on Hybrid Electric Vehicles (HEVs) in a bid to provide relief to public. But it also proposed Regulatory duty levied on luxury goods. As tariff rationalisation measures, the Federal Board of Revenue (FBR) granted 50 percent exemption of duty and taxes up to 1800 cc HEVs and 25 percent above 1800 cc.

FBR names 3-member committee to plan installation of nuclear radiation monitors three-member committee of Pakistan Customs has been formed to finalise and implement the plan to install nuclear radiation monitors at important entry points on Pakistan. The committee will be headed by Additional Director of Directorate General of Intelligence and Investigation-Customs, Imran Chaudhry.

Federal Government has decided to install radioactive portal monitors at all the important entry points of Pakistan.

The decision has been made after FBR’s indication of nuclear radiations in scrap of some containers imported by local importers into the country.

The plan is to be developed with the mutual cooperation of FBR, Strategic Planning Division and Foreign Ministry. The project was promoted by Foreign Secretary Aizaz Ahmad Chaudhry.

In the first phase of the plan’s implementation the radioactive monitors shall be installed at Islamabad, Wahga, Karachi and Torkham. While, installation at Chaman and other entry points of Pakistan will take place later.

According to sources FBR had detected nuclear radiations on scrap imported through Torkham check post located at Pak-Afghan border. Since containers entering through Torkham are brought to Karachi before being opened, therefore, the radioactive monitors will be simultaneously installed at Torkham and Karachi during the initial phase.

Imported scrap as well as other consignments will also be monitored for any nuclear radiations at both points. Sources added that international community has already been demanding of Pakistan the installation of such monitoring devices at all the important entry points of the country. —CT Report

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economic Survey

ExemptionsuptoRs477.1b:SROsonSTcostkittyRs230binFY13-14 ISLAMABAD

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he tax exemptions and concessions being offered to various sectors, groups and investors cost the national exchequer Rs477.1 billion during 2013-14 against Rs239.5 billion in 2012-13, reOlecting an extraordinary increase of Rs237.6 billion. The Economic Survey (2013-14) disclosed that tax expenditure for 2013-2014 has been worked out at Rs477.1 billion.

The cost of tax exemptions in

the head of sales tax, income tax and customs duty has increased by Rs237.6 billion in 2013-14 as compared with 2012-13. Six sales tax statutory regulatory orders caused a cumulative loss of Rs230 billion in 2013-14 which is higher than the total income tax expenditure of Rs96.634 billion. The cost of sales tax exemptions totalled at Rs249 billion in 2013-2014 against Rs37.436 billion in 2012-13, income tax, Rs96.6 billion against Rs82.393 billion and cost of custom duty exemptions was Rs131.451 billion in 2013-2014 against Rs119.706 billion during corresponding period of last Oiscal.

The sales tax exemption SROs resulted in major increase in revenue loss to the national exchequer during 2013-14. The cost of tax exemptions has been considerably increased due to the sales tax exemption SROs during 2013-14. The Economic Survey disclosed the FBR has suffered massive revenue loss of Rs19 billion due to sales tax exemptions and zero-rating available through Export Facilitation Schemes during 2013-14. The sales tax statutory regulatory orders (SROs) caused huge revenue loss to the tune of Rs230 billion to the national kitty during this period.

Sales tax concessions available to

the Oive leading export oriented sectors ie textile, leather, carpets, surgical and sports goods caused revenue loss of Rs65 billion in 2013-14. The exemption of customs duty on the imports from China under different notiOications caused accumulative revenue loss of Rs21.464b during 2013-14. The general and conditional exemption of customs duty (non-survey) caused huge revenue loss of Rs32.515b. The income tax exemption granted to the Independent Power Producers caused revenue loss Rs52.030b in 2013-14 against Rs48.600b in 2012-13, reOlecting an increase of Rs3.43b.

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NATIONAL 05

JUNE 10 - JUNE 16, 2014

Raise in property tax need of the hour: punjab finance Minister

MULTAN: Punjab Finance Minister Mujtaba Shujaur Rahman has said that property tax is the need of the hour which should have been the leading contributor in revenue generation. Shuja said that property tax had not been raised since 2001 despite the fact that rental value of properties increased by 300 to 400pc during last thirteen years. Collection from this source goes to development authorities, WASA and to TMAs for development and upgraded civic facilities.

A fresh survey of property tax has been completed and an increase ranging from 60pc to 105pc has been proposed.

Seizures: Customs adds Rs4.89b to national kitty in May ISLAMABAD

MCC Appraisement-West collects Rs16,714m, shortfall remains Rs6,073m MCC Appraisement-east collects Rs14,863m against Rs21,584m target, Rs 4,149.9 million customs duty collected

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KARACHI

SOHAIL RAB KHAN www.customstoday.com

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odel Customs Collectorate of AppraisementWest despite all out efforts has failed to achieve the revenue target set by the Federal Board of Revenue for the month of May, 2014.

MCC Appraisement-West had a target of Rs 22,787 million in share of customs duty, sales tax, federal excise duty and income tax for the month of May, 2014. However, the collectorate has managed to collect Rs 16,714 million in share of all four major heads with the difference of Rs 6,073 million.

As per statistics, MCC Appraisement-West has collected revenue of Rs 6,105 million in share of customs duty against the target of Rs 10,306.4 million with the huge difference of Rs 4,201.4 million.

Similarly, the collectorate has generated revenue of Rs 7,650 million in share of Sales Tax in the month of May, 2014 against its set target of Rs 8,142.2 million with the shortfall of Rs 492.2 million.

The collectorate has collected revenue of Rs 2,854 million in share of income tax against the target of Rs 4,267 million with the difference of Rs 1,413 million However, MCC AppraisementWest has collected revenue of Rs 105 million in share of federal excise duty

— Exclusive Customs Today photos

akistan Customs and Directorate General of Intelligence and Investigation-Customs has identified billions of rupees for recovery from tax evaders and confiscated vast amount of smuggled goods while preventing huge losses to the national exchequer.

During May, 2014 Pakistan Customs authorities have acted upon various cases of tax evasion worth over Rs 2.467 billion.

Whereas, Customs Intelligence has confiscated goods and articles worth over Rs 2.43 billion in antismuggling activities across the country. The seized goods include vehicles, tyres, cloth, cosmetics, jewellery, cell phones, electronic appliances, machineries and dozens of other kinds of articles.

According to customs authorities and DGI&I-Customs, earlier in the months of March and April combined Pakistan Customs had identified tax evasions worth Rs 1.21 billion. Similarly DGI&ICustoms had impounded goods worth Rs 0.828 billion during antismuggling activities in the two months. Both the values combined give a sum of Rs 2.038 billion.

Interestingly the figures for the month of May in this regards are twice as much as the respective figures for the months of March and April combined, i.e., over Rs 4.897 billion.

Collector Appraisement west Muhammad Saleem

Collector Appraisement east Najeeb-ur-Rehman Abbasi

against its set target of Rs 71.30 million with a surplus of Rs 33.7 million.

It is pertinent to mention here that the collectorate, while being short of the target, had managed to collect Rs 15,680 million for the month of April, 2014 against its revenue target of Rs 20,920.7 million for the month of April, 2014.

It had collected Rs 5,703 million against target of Rs 8,996.2 million in

share of customs duty; Rs 7,078 million against target of Rs 7,722 million in share of sales tax and additional sales tax; Rs 2,785 million against target of Rs 4,151.5 million in share of income tax.

However, MCC AppraisementWest had collected a sum of Rs 114 million in share of federal excise duty against the set target of Rs 50.6 million with Rs 63.4 million surpluses.

Meanwhile, Model Customs Col-

lectorate of Appraisement-East has collected total revenue of Rs 14,863 million in the month of May, 2014 against its set target of Rs 21,584.6 million with a shortfall of Rs 6,721.5 million.

MCC Appraisement-East has collected revenue of Rs 4,149.9 million in share of customs duty against the set target of Rs 6,871 million with a difference of Rs 2,721.1 million.

The collectorate has collected an amount of Rs 8,532.3 million in share of sales tax against the target of Rs 10,362.8 million with a shortfall of Rs 1,830.5 million.

Similarly, it has collected revenue of Rs 2,117.7 million against the set target of Rs 4,267.1 million with a difference of Rs 2,149.4 million.

Model Customs Collectorate of Appraisement-East has collected Rs 63.2 million in share of federal excise duty against its set target of Rs 83.7 million with Rs 20.5 million shortfalls.

MCC Appraisement-East had also lagged behind its revenue collection target set by the Federal Board of Revenue in the month of April, 2014 as it has collected Rs 13,085.2 million against Rs 20,036.9 million.

The collectorate had collected Rs 3,673.1 million against target of Rs 5,997.5 in share of customs duty in the month of April, 2014; Rs 7,328.4 million against target of Rs 9,828.6 million in share of sales tax; Rs 1,957.3 million against target of Rs 4,151.5 million in share of withholding tax; and Rs 59.4 million against target of Rs 126.4 million in share of federal excise duty.

Achievingrevenuetargetseemsunrealistic;fBRcollectsRs1967b ISLAMABAD

MuHAMMAd fAIZAN www.customstoday.com

E

ven after revising the revenue target twice, it has become apparently an impossible task for Federal Board of Revenue to collect Rs 2,275 billion by the end of the current fiscal year. The latest data obtained by Customs Today revealed that until June 6, 2014, FBR had collected merely around Rs 1,967 billion while in just 24 remaining days, the Board had to collect Rs 308 billion.

FBR authorities expect that by June 30 this year, they will not be able to collect more than Rs 2,200 billion. The campaign to collect advance income tax to increase revenue collection was supposed to be started by June 2. However, due to some reasons the campaign could not be started.

On the brighter side, despite all the odds FBR has generated 15 per cent more revenue than the previous fiscal year during

the same period. This shows an improved performance by the federal revenue body.

However, unrealistic target set by the federal government created all the troubles for the revenue authority.

The taxes collected until June 6 comprise Rs744 billion in share of income tax; Rs928 billion in share of sales tax; Rs145 billion in share of federal excise duty; and Rs211 billion in share of customs duty. Out

of the total amount of Rs2,028 billion, FBR is yet to pay refunds of Rs 61 billion which brings down the actual tax collection to Rs1,967 billion. During the same period in the previous fiscal year, FBR had collected Rs1707 billion out of which the Board owed Rs83 billion in refunds.

It is significant to mention here that at the start of Fiscal Year 2013-14, the target for revenue collection was set at Rs2,475 billion and it was revised down to Rs2,345 billion. After that the target was once again revised in the light of appreciated value of Pakistani rupee in international market and further brought down the target to Rs2,275 billion in agreement with International Monetary Fund whose consultation was obligatory for the Extended Fund Facility (EFF) programme to continue. Sources said that taking into consideration the existing situation, FBR authorities have asked the Finance Ministry to take a second look on the revenue target for the upcoming Budget i.e. Rs2810 billion, before it is rectified by the Parliament.

— Exclusive Customs Today photos

06

SPECIALREPORT

www.customstoday.com JUNE 10 - JUNE 16, 2014

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SPECIALREPORT 07

JUNE 10 - JUNE 16, 2014

LAHORE

M HAYAt

www.customstoday.com akistan Customs is in dire need of fresh blood to rejuvenate it as staff shortage has hampered adversely the efforts to root out smuggling and ensure effective Oield enforcement.

Soft-spoken Central Region Chief Collector of Customs Rozi Khan Burki stated this while sharing his thoughts with Customs Today during an exclusive interview here at Customs House.

Mr Burki pointed out that the indigenously established WeBoc system for customs stood testimony to the talent, skills and competence of Pakistani nation. He informed that concrete measures were being taken to overcome under-invoicing.

The Chief Collector Customs maintained that the present era was the age of communication and better communication system could result in better output, adding that through modernization of communication systems, the Pakistan Customs had sorted out so many difOiculties.

“WeBoc, an automation system developed for the customs, has turned out to be a milestone in bringing about revolutionary changes in the execution of routine affairs. The system is an indigenous one which speaks volumes about the competence of our people. That is the reason that our automated system is far better and advanced as compared to the Indian automation system,” Mr Burki elaborated.

To a question about revenue tar-

get, the Chief Collector Customs informed, “We have been tasked with an additional 28 percent target as compared to the last year.

Burki was of the view that so far as Lahore collectortate was concerned, it would be able to achieve the set target despite numerous challenges.

However, Multan and Faisalabad which largely depend on oil import, may fall short due to drastic reduction in imported oil’s clearance at these two collectorates,” he expressed his apprehension.

“Till the last Oiscal year the ratio of imported and indigenous oil was 80 and 20 percent respectively; however, the ratio of imported oil has plummet to 50 percent while local oil consumption has increased to 50 percent, creating a gap of 30 percent,” he explained.

Giving his input on mis-declaration and under-invoicing of goods, the Chief Collector Customs disclosed that there was no question of mis-declaration of goods as the board had taken far-reaching measures. “Let me tell you that the Customs determines prices of goods up to 80 percent before hand and that’s why mis-declaration of goods is not as easy today as has been in yesteryears,” Mr Burki declared.

“One thing more which I must want to highlight that to overcome under-invoicing, the department imposes penalties up to Rs5,000 for the unavailability of invoice at container which is insufOicient and the importer don’t care for it. However, now it has been proposed to raise the Oine amount for the unavailability of invoice at the time of examination of

PROFILE

containers up to Rs35,000, which hopefully will enable the department to overcome the problem,” he detailed.

To a question about elimination of smuggling, the chief collector declared that until the Customs Department evolved a full-Oledged antismuggling force, it was difOicult to uproot the menace.

“Since 1994, the department has not recruited even a single constable in the anti-smuggling unit and most of the constables and inspector have grown old. Then clerical staff’s promotion as inspector is also an issue as clerical staff can never discharge the duties as a fully trained inspector,” the chief collector elaborated, adding that anti-smuggling unit ofOicials were not as equipped with modern weaponry and ammunition system as the smugglers were.

“InefOicient and old anti-smuggling unit ofOicials needed to be replaced with energetic and educated youth,” he emphasized, adding that work on a proposal for phasing in fresh blood in the department was in progress.

“Look, the new recruitment will enable the department to tackle the menace of smuggling in a better manner,” hoped Rozi Khan Burki.

Talking about cross-border trade with India, he stressed the need for developing infrastructure on modern lines, saying that unfortunately checking-point at Wagah Border lacked capacity to cater to the needs of Pakistan and India trade.

“Proposals on improving infrastructure and opening of extra gates at the border in collaboration with the World Bank and the Asian Devel-

opment Bank are being considered and it is expected that things will change for better as a result of the measures being adopted by the Commerce and Defense ministries, Mr Burki expressed his optimism.

He disclosed that the ban on recruitments had affected performance of the Customs Department adversely and the lack of workforce had been hampering anti-smuggling efforts and effective Oield enforcement.

“There was times when Customs was among the most efOicient and effective institutions of the country but now it has lost its credibility due to acute shortage of smart and educated ofOicers since 1994,” he regretted.

He wished that ‘fresh blood’ must be injected into the Customs Department to rejuvenate it and help it regain its lost glory.

Inefficient and old anti-smuggling unit officials need to be replaced with energetic and educated youth

Chief Collector of Customs (Central Region) Rozi Khan Burki obtained his Masters degree in political Science and did MSc in defense and Strategic Studies from National defense university. He joined the Customs department in 1982 and served throughout the country on various important assignments including Collector Customs Quetta, Collector Customs peshawar, second secretary and secretary in federal Board of Revenue. He, recently, was posted to punjab as Chief Collector Customs (Central Region) at Customs House Lahore. According to the chief collector, it is, indeed, a unique experience for him to work in Lahore as chief collector customs.

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08 EDITORIAL

JUNE 10 - JUNE 16, 2014

Founder & Chairman Zulfiqar Ali Editor Rahil Yasin editor@customstoday.com.pk For advertising & subscription marketing@customstoday.com.pk +92-322-3370002 www.customstoday.com Phones: 042-35781643-4, Fax: 042-35781645 Address: 627, Siddiq Trade Centre, Gulberg, Lahore

edItORIAL

Ambitious target

t

he government has fixed highly ambitious tax collection target of Rs 2,810 billion for FBR in the budget 2014-15 against a revised estimates of Rs 2,275 billion in the outgoing fiscal year ending on June 30, 2014. FBR will require a growth of over 25 per cent in coming fiscal year in order to achieve the desired target.

The government has given five major areas for finalizing its tax proposals which are currently under consideration in shape of Finance Bill 2014-15 by the elected Parliament. In a welcoming move, the government has reduced maximum tariff regime from 30 per cent to 25 per cent in the budget as rationalization of tariff would help curb smuggling and increase revenues in years ahead. On the other hand, the government has imposed regulatory duty on luxury items such as chocolate, mineral water, cosmetics and few other items in order to discourage their imports.The focus of this year’s tax proposals is on increasing the direct taxes share by 2/3rd of total revenue proposals.

These proposals are mostly income tax based, removing inequities in tax structure, encouraging compliance and increasing the cost of doing business for non-compliant, removing distortions and discrimination by eliminating exemptions and concessions and promoting FDI and industrialization.The government has withdrawn different SROs as well as abolished exemptions in a bid to broaden the narrowed tax base. After inability of the tax machinery to expand its tax base in last two decades, the FBR has taken conscious decision to increase its reliance on withholding mode which is considered as easy way of collecting taxes.

Through withholding mode, the government has increased cost of doing business for persons who have preferred to remain outside the tax net and given incentive to those who are NTN holders and regular return filers.

Through different measures for increasing cost of doing business in Pakistan for non compliant, the government has imposed adjustable advance tax with higher rates for non-compliant persons on First/Club class international air tickets at 6 per cent and for compliant taxpayer at 3 per cent.The government has also slapped adjustable advance tax on purchase of immovable property at rate of 2 per cent for non filers and 1 per cent for filers, extra 5 per cent adjustable Advance Income Tax on interest income (over Rs500,000) and dividend income for non-compliant, adjustable advance tax on purchase/registration of new private vehicles; rate for noncompliant double of the compliant and adjustable advance tax on high end domestic electricity consumers at 7.5 per cent for electricity bill over Rs100,000.

In shape of withdrawal of exemptions, the government has abolished tax exemption on bonus shares. A study of FBR reveals that total transaction on bonus shares stood at Rs1500 billion during the outgoing fiscal year and with imposition of 5 per cent tax the collection could go up by Rs75 billion. FBR had estimated that its collection through 5 per cent tax on bonus share could collect Rs 15-20 billion in the coming fiscal year.The government has slapped adjustable withholding tax on plots, purchase of plots and increasing FED on cigarettes in the budget.

On relief side, the government has granted exemption from customs duty and sales tax on import and supply of high efficiency irrigation equipment and greenhouse farming equipment for agriculture sector; reduced rate of sales tax on local supply of tractors from 16 to 10 per cent; reduced rate of FED on telecommunication services from 19.5 to 18.5 per cent and withdrawal of FED from provinces where the GST on telecom services has been levied; reduced withholding tax on telecom services from 15 to 14 per cent and encouraging Foreign Direct Investment by reducing the corporate tax for foreign investment from 33 to 20 per cent for five years.

An uphill task ISLAMABAD

SM HAIdeR

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I

n the wake of fixation of highly challenging tax collection target of Rs 2810 billion in fiscal year 2014-15, the FBR has been assigned to collect Rs 1180 billion in shape of Direct Taxes and Rs 1630 billion as Indirect Taxes in order to touch the desired collection figure.

Out of indirect taxes of Rs 1630 billion, the FBR has fixed tax collection target of Rs 281 billion on account of Customs Duty in the budget 2014-15 against revised collection target of Rs 241 billion for the current fiscal year. The actual target for the outgoing fiscal year 2013-14 has been fixed at 279 billion.

An unprecedented appreciation of rupee against dollar has proved good phenomena for many other sectors of the economy but it became unproductive for the tax machinery as imports declined and overall collection of the FBR affected negatively in last ongoing quarter of the outgoing fiscal year.

Despite making efforts to plug leakages through enforcement

of Afghan Transit Trade (ATT) agreement the sudden rise of rupee proved shocking for the tax machinery as it caused revenue loss of at least Rs 60 to 70 billion in the outgoing fiscal year. The major blow faced by the Customs Duty and collection of other taxes on imports such as withholding tax at import stage and sales tax on imports.

Keeping in view this difficult equation and the government’s preparation of budget at Rs 99 against a US dollar, the FBR will have to work hard to touch its desired tax collection target of Rs 2810 billion in fiscal year 2014-15.

For touching the collection figure of Rs 2810 billion in fiscal year 2014-15 against revised collection estimates of Rs 2275 billion, the FBR requires additional revenues of Rs 535 billion.

With nominal growth of 13.1 percent over the revised collection of Rs 2275 billion plus buoyancy in tax collection, the FBR’s collection would go close to Rs 2550 billion.

The FBR has estimated that it will collect additional Rs 231 billion including Rs 103 billion through withdrawal of SROs

Keeping in view this difficult equation and the government’s preparation of budget at Rs 99 against a uS dollar, the fBR will have to work hard to touch its desired tax collection target of Rs 2810 billion in fiscal year 2014-15

and Rs 128 billion in shape of taxation measures in order to touch the desired tax figure of Rs 2810 billion on June 30, 2015.

According to FBR’s estimates, it will collect Rs 32 billion through withdrawal of exemptions on Customs, Sales Tax Rs 35 billion and Income Tax Rs 36 billion during the fiscal year 2014-15.

In order to collect Rs 128 billion through additional tax measures, the FBR has estimated to collect Rs 4 billion through Customs Duty, Rs 16 billion through Sales Tax and Rs 108 billion through Income Tax in the fiscal year 2014-15.

Almost half of direct taxes will be collected through additional measures taken into withholding regime as the reliance on this side has been increasing with every passing year.

But the tax experts say that the time has come that the FBR should develop its capacity to abandon withholding tax regime and convert it on return based Oilers by utilizing data warehouse in the context of increasing Information Technology (IT) and without creating harassment among taxpayers.

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JUNE 10 - JUNE 16, 2014

09

A third of registered corporations file returns, one-fifth pay taxes: report

ISLAMABAD: A report prepared by SDPI, a think tank, has revealed that the total number of corporate taxpayers which filed tax returns was 23,845 against 61,989 registered companies while only 13,206 paid income tax.

Remaining 38,144 companies were non-filers. The tax contribution of the companies who paid their taxes was Rs 315.85 billion which represents 43 per cent of the total direct tax collection for the Tax Year 2012-13. Interestingly state’s own enterprises were the highest taxpayers.

ollectorate of Customs Adjudication-II has issued show-cause notice against the importer M/s Falak Weaving in connection with tax evasion of Rs 2,122,514 in share of Additional Sales Tax (AST) of Rs 1,050,749 and Income Tax of Rs 1,071,764 by misusing the SRO 1125(I)/2011.

The importer M/s Falak Weaving on its import of textile fabric (137,323kg) worth Rs 52,537,464 through Goods Declarations (GDs) KAPE-HC-16980-10072013, KAPE-HC-896503082013, KAPE-HC-14575-22082013, KAPE-HC-21476-14092013, KAPE-HC-3974708112013, KAPE-HC-39750-08112013, KAPE-HC-44028-23112013 and KAPE-HC44032-23112013 violated the Section 3,4,6,7A,8(1b),34,36 and 71 of the Sales Tax Act, 1990, further read with the Section 148 of the Income Tax Ordinance 2001, punishable under clauses (14) of Section 156(1) of the Customs Act, 1969 read with Section 33&34 of the Sales Tax Act, 1990.

Directorate of Intelligence and Investigation-Customs, Karachi in its contravention report stated that the said importer was misusing SRO 1125 (I)/2011 by clearing the imported fabric as industrial manufacturers whereas either their manufacturing units do not exist at the notified business addresses or even if they exist, have no or modicum manufacturing facility and have inflicted huge loss to national exchequer.

It was further stated that the manufacturing unit has not been found existing on the mentioned place at the notified business address, adding that non-existence of the unit was an ample proof establishing beyond any doubt that the importer’s previous clearance as industrial manufacturer under SRO 1125(I)/2011 and availed exemption of taxes to the extent of 2 per cent as AST and 2 per cent as Income Tax were quite illegal and unlawful.

C

wRIte tO uS YOuR gRIevANCeS: Through CuStOMS tOdAY platform HeLp deSK, now you have chance to dIReCtLY write your problems to top govt. functionaries.

If you have any grievances, queries, questions or suggestions, you can write in this section as it provides easiest access to you to approach Customs and Revenue authorities. wHO can write in this section?

Importers & Exporters, Customs Agents, Chambers of Commerce, Trade Associations and Customs Officers tO wHOM you can write?

Honourable PM, Minister/Secretary for Finance & Revenue, Minister/Secretary for Ports and Shipping, FBR Chairman, Member Customs and Chairperson Senate/National Assembly Standing Committee on Finance & Revenue.

Send your letters at: letters@customstoday.com.pk

Sialkotdryportoperating24/7to facilitateimporters,exporters:Collector SIALKOT

ZAfAR MALIK

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odel Customs Collectorate Sialkot Collector Qurban Ali Khan has said that an advanced 24/7 duty system has successfully been introduced at Sialkot Dry Port Trust, as the senior efOicient ofOicials of Customs, Anti Narcotics Force and Sialkot Dry Port have been performing round-theclock duties there to lure the Sialkot exporters, importers and customs and cargo clearing agents while motivating them to do their business through Sialkot Dry Port.

He stated this while talking to the Customs Today at his ofOice. He pledged to leave no stone unturned for promoting the exports and imports through Sialkot Dry Port, saying that the Sialkot Dry Port Trust was now offering the special services, which were of international standard.

He vowed to make Sialkot Dry Port Trust a centre of excellence in active cooperation with the Sialkot business community as well.

Qurban Ali Khan said that there existed a huge potential of exports from export-oriented Sialkot city through the Sialkot Dry Port and Sialkot International Airport as well.

He said that the exporters had been forwarding their exports to the tune of Rs 7 billion from Sialkot Dry Port Trust every month while forwarding exports of the same volume i.e. Rs 7 billion from other parts of the country every month also.

“We have been striving to bring back these Rs 7 billion exports to Sialkot Dry Port from the other parts of the country by ensuring the early, smooth and hurdle-free provision of all the related facilities to Sialkot exporters at

— Exclusive Customs Today photo

Adjudication-II serves show-cause notice to M/s FalakWeaving

Sialkot Dry Port,” he revealed.

He said that the time was ripe for Sialkot exporters and importers to come back to Sialkot Dry Port Trust and do their business through the dry port on priority.

He said that the proposal was also under active consideration to provide the trade-related incentives to the customs clearing agents at Sialkot Dry Port, adding that there had been 150 licensed customs clearing agents, working

at the dry port.

Collector Qurban Ali Khan narrated that the exporters of Sialkot are the ‘Roaming Ambassadors of Pakistan’ who travel all around the world to fetch business and with their personal efforts, the export earnings of Sialkot stand at $1.6 billion annually, which is six per cent of the total exports of Pakistan.

He hailed the spirit of self help of Sialkotbased exporters, who have established Asia’s Oirst ever international airport in private sector at Sialkot. He said that Sialkot International Airport also has a huge potential of cargo exports through the international airlines, which had been offering the worthwhile air freight packages here.

He added that the exporters had been earning precious foreign exchange to the tune of $ 1.6 billion annually besides playing a pivotal role in strengthening the national economy and boosting the national exports as well.

The Collector admired that the exporters of the city had always played a pivotal role in the beautiOication of the export-oriented city by completing several mega projects of socio-economic, human development oriented and public welfare projects by spending billions of rupees on self help basis. They have been setting unique examples of self help while advising the others to replicate it.

He pledged to provide all the related services and solving the prolonged perturbing problems of the trendy Sialkot exporters whom he admired for establishing Sialkot International Airport, Sialkot Club, Kashmir Park, Sialkot Tanneries Zone, Sialkot Export Processing Zone (EPZ), Sialkot Dry Port Trust and construction of all the main inter-city roads of Sialkot under the Sialkot City Development Package on self help basis, saying that the Sialkot exporters were giving the sharing hands to the government for strengthening and boosting national exports and economy as well.

SIte Association facing basic problem To, Honourable Sindh Chief Minister, Karachi

issues. Through a comprehensive study conducted by the office-bearers of SITE Association of Industry, it came into the notice that 40 million gallon daily (MGD), is a need for the industrial zones located in the premises of SITE Association of Industry. However, the industrial zones have not yet received the allocated quota of water.

There is an urgent need to formulate a network plan for provision of water supply in SITE Association of Industry, so that the trade activities could be enhanced.

I hope that you would consider the said issue and would take immediate notice to redress the grievances of the trade bodies.

Respected Sir, Through this letter, I would like to draw your kind attention towards a sensitive issue relating to the scarcity of water supply in Sindh Industrial Trading Estate (SITE) Association of Industry.

Sir, the industrial areas of SITE Association of Industry is facing acute shortage of water supply, adversely affecting the trade activities of the industrial units existing in the SITE zone.

Being one of the oldest representative bodies of industries located in Sindh Industrial and Trading Estates, it should be equipped with all essential infrastructure

and other basic facilities. However, it is facing lack of proper infra-

structure including roads network, security along with water related

Yours sincerely, Younus Bashir, Chairman SITE Association Karachi

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10 NATIONAL

JUNE 10 - JUNE 16, 2014

ANf seizes drugs, arrests three

RAWALPINDI: Anti Narcotics Force has arrested three drug smugglers from the airport and other areas of Rawalpindi.

A resident of Mardan was arrested at Benazir Bhutto International Airport for attempting to smuggle heroin to Saudi Arabia. After being stopped by ANF officials, he confessed to having 94 heroin-filled capsules in his stomach. Another person, a resident of Rawalpindi, was arrested in a locality of Rawalpindi after ANF seized 400 grams of heroin from his possession. A resident of Jehlum was arrested after 2.4 kg of hashish was found in his possession.

ISLAMABAd: Prime Minister Muhammad Nawaz Sharif addressing the Senate session.

Finance Minister Ishaq Dar, Ports and Shipping Minister Kamran Michael and Commerce Minister Khurram Dastgir are also seen in the picture.

KARACHI: Businessmen listening to budget speech of the Federal Finance.

RAwALpINdI: Members of Rawalpindi Chamber of Commerce and Industry and traders listening to budget speech.

ISLAMABAd: Member PAC and MNA Mian Abdul Mannan, Federal Secretary Petroleum and Natural Resources Abid Saeed, President FCCI Engineer Suhail Bin Rashid, GM Customs Today Mian Shafqat and others in a group during their visit to Ministry of Industry.

Oath-takingceremonyofelectedoďŹƒce-bearersofPreventiveAssociation,Club KARACHI

CuStOMS tOdAY RepORt www.customstoday.com

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he oath-taking ceremony of the elected ofOice-bearers of Preventive Service OfOicers Association and Preventive Service OfOicers Club held on Saturday, May 31.

The ceremony held at Preventive Services Club & Sports Complex, F B Area. Chief Collector of Customs Enforcement-South Muhammad Nazim Saleem was the chief guest on the occasion.

The Collector of MCC-Preventive Syed Muhammad Tariq Huda and other ofOicers also attend the oath-taking ceremony of the elected ofOicebearers.

KARACHI: Chief Collector Enforcement -South Muhammad Nazim Saleem addressing the oathtaking ceremony.

KARACHI: Collecor Preventive Tariq Huda administering the oath .

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NATIONAL

JUNE 10 - JUNE 16, 2014

pM Okays 2pc wHt on property purchase

ISLAMABAD: Prime Minister Nawaz Sharif has approved imposition of 2% withholding tax on purchase of property in the upcoming budget, against FBR’s proposal to acquire private properties at about 20 per cent over and above rates declared in transfer deeds. Government is considering imposition of 2% withholding tax on the purchase of property for those who are not filing their income tax returns. However, the rate would be only 1% on the purchase of property for those who file their income tax returns.

development of weBOC clearance system KARACHI

RAfIuLLAH BANgASH ASSISTANT COLLECTOR

s part of its reform and modernization efforts, the erstwhile Central Board of Revenue (CBR) under the banner of Customs Administrative Reforms (CARE) which replaced decades old, notoriously inefficient, manual system into a progressive computerized clearance system capable of catering to the present day demands of huge volume of cross border and international trade.

With web based interactive computerized clearance systemcalledPakistanAutomatedCustomsClearanceSystem (PaCCS). All functions of customs were brought online accessible through theWorldWideWeb.The whole operation was brought to one window working round the clock. All operations, right from Vessel Intimation Report filed by the ShippingLinestofilingofGoodsDeclarationsbytheimporters/ exportersortheirclearingagents,washandledbythecustoms officials from the comfort of their offices at any point of time suited to them through the web.

However, a dispute with the foreign vendor of the PaCCS software, led to a disruption, and then a rather unexpected completeshutdownofthePaCCSsoftwarefollowed.Thisposed a great challenge to FBR and its Customs wing as seamless transition of business to another computerized clearance system was immediately required without any problem for the country’s cross border trade of around $40 billion. This challenging task was assigned to a team of experienced and dedicated officers of Customs and PRAL, a subsidiary of the FBR.Theteammembersworkeddayandnightanddeveloped a totally indigenous software calledWeb Based One Customs (WeBOC)atacostwhichwasfarlessthanthemonthlycharges which the FBR had been paying to the foreign owners of the erstwhilePaCCS. Priortotheintroductionofthecomputerized

A

clearancesystem,importandexportconsignmentswaitedat the port for clearance for as long as seven days on an average.

Thenewclearancesystemhasdrasticallyreducedthiswaiting time known as 'dwell time'. Besides bringing down the 'dwell time' of the consignments at port, the important feature of thesystemisthatimporters/exportersortheirclearingagents arenomorerequiredtocometothecustomsstationseitherfor submissionorprocessingoftheirGoodsDeclarations(GDs).All declarations and supporting documents, if any, that are required for the purpose of assessment for clearance of cargo, are received electronically on the web, and hence, there is no interaction between the taxpayer and tax collector. This has made the customs clearance process more efficient and transparently. WeBOC is an interactive system and works in a completely paperless manner. In case an assessment or examination is required on some occasion, the same are done online and each operation is also reported to the trader online. It isimportanttomentionherethatexaminations are done by the Customs with the assistance of the Terminal Operators and at no stage the importers/exporters or their clearing agents are required to come to the Port, as was the case previously.Similarlythetradersortheiragentsare not required to come to Customs House for the processing of documents which was a norm in the erstwhile manual system. As mentioned earlier, WeBOC is a one-window system. One can enter into the portal of WeBOC by clicking on the link www.weboc.gov.pk and carry out all his activities related to Customs from anywhere in Pakistan. All one requires is a User ID, a computer and an Internet connection. The business community can avail the services ofWeBOC 24 hours a day and seven days a week.

GiventhesuccessofthesystematKICT,PICTandQICT,the WeBOC system has now been rolled out to whole of the countrywithallinternationalairportsanddryportsswitching to WeBOC. It is hoped that soon cross border trade between Pakistan and its neighbouring countries will be done through theWeBOC system.

In line with the policy of the government, WeBOC places complete trust in traders involved in the import/ export business.Itisprimarilyaself-assessmentsystemandCustoms does not interfere in the process of discharge of the legal liabilities of importers regarding duties and taxes. The importers/exporters calculate and discharge their legal liabilities themselves before submitting their declaration to Customs over the web. On submission of the declaration to

Customs an instant online receipt in the shape of Customs Reference Number (CRN) is generated. The moment a CRN is allotted, the RMS commences the processing of declaration.

We believe that import and export is done largely by responsible and legitimate businesses and normally do not pose any threat to the country or the exchequer. In such a situation, cargo is cleared and the importers/ exporters are intimated online.The process may take less than 30 minutes.

In case any consignment is selected for compliance check by the system, certain services such as physical examination of goods,scanningandsampledrawlareprovided.Nevertheless, the processing systems are highly sophisticated and meticulously designed to detect and prevent illicit practices.

Inordertoavoiddelaysandinconvenience,correctandcareful declarationisalwaysadvised.Manifestinformationarekeyed in online or uploaded to WeBOC directly using the MDB data structure provided on website.

However,likeallautomatedsystems,WeBOCalsorequires constant up gradation and improvement. Part of this up gradation is technical which means that the underlying architecture of the system needs to be revised and brought at par with the modern systems that are being introduced around the world using more advanced software while part of it relates to revising and revamping the customs processes and procedures to make them compliant with our international commitments such as the Revised Kyoto Protocol, WTO trade agreement and variousinternationaltradeagreements.WeBOCaims to address these goals in its‘Version 2’. Moreover, as the system develops, focus is shifting from simply automation of manual procedures to making them more efficient to reduce time and costs for the trade.

This will require significant business process reengineering. WeBOC is not only a customs clearance systembutitalsoaimstomorphintoanationalsinglewindow integratingallstakeholdersconcernedwiththeimport/export of goods into a unified web portal. Initial steps have already been taken in this regard withWeBOC providing connectivity to port authorities, National Bank of Pakistan, IRS, the FBR, and the Engineering Development Board. Other ministries such as the Ministry of Commerce and the Ministry of Climate Control will soon become part of WeBOC to perform their respective functions. WeBOC is Pakistan’s own indigenously developed software and a good example of successful project management and execution. Its broad based consultative process ensures that all stakeholders are on board and willing to implement the new changes introduced in the system.

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Published by M. F. Riaz, Off. 91, 3rd Flr, Gul Plaza, M.A. Rd., Karachi, for Customs Today and Printed at Dhoom Printing Press Masheer Mahal Building, Off: I. I. Chundrigar Road, Karachi