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PAKISTAN’S fIRST INDePTH NeWSPAPeR ON CuSTOMS
Vol 2 Issue No. 23
Karachi, Tue June 24 - Mon June 30, 2014
Weekly
Regd. No, MC-1381
Price Rs. 50.00
MCC Appraisement-West
RefORMINg TDAP
launches crackdown on tax evaders PRV Section of MCC Appraisement-West will sort out the data of the importers involved in mis-declaration and tax evasion
PROMOTINg TAx CuLTuRe
The country can not be developed without promoting the tax culture, says Senate’s Standing Committee on Finance Chairperson Nasreen Jaleel. | See PAge 06 | CuRBINg SMuggLINg
Customs authorities have confiscated 106 tonnes of smuggled black tea all together worth Rs 53m in 3 operations in different markets. | See PAge 09 | eLIMINATINg ANOMALIeS
FBR will form a committee to identify and eliminate anomalies in Budget 2014-15 which will start working in July 2014, says Tariq Bajwa. | See PAge 02 |
KARACHI
SOHAIL RAB KHAN www.customstoday.com
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ost Release Verification (PRV) Section of Model Customs Collectorate of Appraisement-West on the directives of Chief Collector-South Nasir Masroor and Collector MCC Appraisement-West Muhammad Saleem, has geared up to initiate a crackdown for recovery against the defaulters and importers, who were found involved in mis-declaration and tax evasion in their imported consignments. Sources informed Customs Today that a high level meeting in this regard has been held in the office of Chief Collector-South in which it has been decided that the PRV Section of MCC Appraisement-West will sort out the data of the importers, who were involved in misdeclaration and tax evasion of duty/taxes and raised demand notices against them in order to recover the outstanding amount. Sources further revealed this scribe that the PRV Section has started work on the directives issued by the office of Chief Collector-South. They further told this scribe that a list of around 110 importers has been prepared in the nd 110 u first phase of the o r a f n recovery camA list o ers has bee ase paign and their t h impor the first p ign National Tax N u m b e r mpa red in prepa recovery ca ould (NTNs) would be blocked for of the heir NTNs w further transacand t blocked tions until they be would not clear their outstanding dues in share of duty/taxes. To a query, sources informed that the PRV Section has also put the consignments of different importers The demand notices on hold, who were involved in against the recovery of the mis-declaration and tax evasion. amount would be sent from next
— Exclusive Customs Today photo
Reforms inTDAP are underway to enhance exports of the country and a working committee has been formed headed by Commerce Secretary to rectify all kinds of matters, says Dastgir. | See PAge 04 |
week to the importers. It is hoped that billions of rupees would be accumulated in the national kitty
by the help of said exercise, initiated by the PRV Section of MCC Appraisement-West.
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02 ISLAMABAD
JUNE 24 - JUNE 30, 2014
Dar unveils package to jack up exports
ISLAMABAD: Finance Minister Ishaq Dar extended support package to cover nine value-added non-textile products to boost exports. The announcement is expected to accelerate exports to European countries under the GSP Plus status. Winding up his budget speech, Dar said that drawback for local taxes and levies is to be given to exporters on FoB value of their enhanced exports if these increase beyond 10 per cent over last year’s exports.
he federal government has withdrawn only Rs75 billion worth of tax exemptions, Rs28 billion lower than what it announced while unveiling the budget earlier this month, shows an official document that forms the basis of taxation measures for the upcoming fiscal year. In income tax, the government withdrew Rs15 billion worth of exemptions against the claim of taking back Rs36 billion in concessions for the next fiscal year 2014-15, beginning from July. Similarly, against the claim of withdrawing Rs35 billion worth of sales tax exemptions, which were provided by issuing Statutory Regulatory Orders (SRO), the document depicted that only tax concessions of Rs27.7 billion were withdrawn. Instead of fully withdrawing the concessions, in many cases the government ended up increasing the tax rates.The scrapping of less-thanannounced tax exemptions will have adverse implications for next year’s revenue target of Rs2.81 trillion, which the Federal Board of Revenue (FBR) already believes is over-ambitious – a view that it has conveyed to the top leadership in closed-door meetings. The inability to do away with most of the exemptions highlights the growing influence of different lobbies that have been enjoying tax breaks for decades, according to tax experts. In remarks made during a recent meeting of the Senate Standing Committee on Finance and Revenue, FBR ChairmanTariq Bajwa stated that the government had worked out the cost of tax exemptions at Rs477 billion. —CT Report
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Committee to sort out anomalies in budget from July: Bajwa ISLAMABAD
MuHAMMAD fAIZAN www.customstoday.com
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BR will form a committee to identify and eliminate anomalies in Budget 2014-15 which will start working in July 2014. The committee will analyse the proposals regarding customs duty tariffs and exemptions forwarded by Federation of Pakistan Chambers of Commerce, other Chambers and various trade organisations. Sources in FBR informed Customs Today that FPCCI President Zakria Usman, Vice President Munawar Mughal, famous industrialists Mirza Ikhtiar Beg and Mirza Ishtiaq Beg visited FBR headquarters and met FBR Chairman Tariq Bajwa. During the meeting, aspects of elimination of exemptions in the Finance Bill 2014-15 for the importers and traders under previously issued SROs and their effects were discussed. The delegation suggested that the levy of Kive per cent duty and an equal percentage of sales tax should be lifted from import of all kinds of machinery just like on textile machinery. The chairman said that whatever
FBR needs to collect over Rs130b till 30th espite dynamic efforts to achieve reduced revenue target after two revisions, Federal Board of Revenue appears to lag behind the mark as in the first sixteen days of June 2014, FBR has collected only Rs 91.676 billion. To meet the tax collection target, FBR is yet to generate over Rs 130 billion in two weeks. However, taking into consideration the current figures, it is seemingly a meagre possibility that the task can be accomplished. FBR has collected Rs 2,144 billion so far. In the same period of previous fiscal year, the revenue body had collected around Rs 1,800 billion. In contrast to FY 2012-13, revenue collection has shown 15.9 per cent growth which is equal to Rs 293.625 billion. Rs 815.57 have been collected in share of direct taxes (income tax); Rs 971.654 billion in share of sales tax; Rs 130.642 billion in share of federal excise duty; and Rs 226.152 have been collected in share of customs duty. It is mentionable here that the revenue body owes around 101.371 billion in rebate/refunds. —CT Report
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Nodateextensionto submitreturns:fBR BR has announced that there will be no extension in the last date for filing returns by FBR officials. According to sources, officers and staff of the Board had to submit their returns and details of their assets by June 16. Otherwise their special allowance would be discontinued for at least three months. Sources said that FBR officials have submitted their returns after the last warning. FBR Chairman has already presented report to the Finance Minister in this regard. —CT Report
F the business community suggests should be forwarded to committee for sorting out anomalies in the Finance Bill 2014-15. He said that the committee would start working from the next month. FBR Chairman assured that all hurdles due to duties and taxation will be removed in the path of busi-
ness, exports and investment. He said that wrong benefits should not be taken from the Self Assessment Scheme. “FBR is ready to listen to real problems of taxpayers all the time,” he added. He further said that taxpayers audit system is being strengthened to increase its jurisdiction.
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Govt reneges on tax exemptions withdrawal promises
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KARACHI 03
JUNE 24 - JUNE 30, 2014
PIAf hails fixing of export targets for commercial counsellors
LAHORE: Pakistan Industrial & Traders Associations Front (PIAF) has welcomed the decision of TDAP to fix export targets for commercial counsellors appointed in embassies abroad and termed it a step in right direction to promote the exports of the country. Chairman PIAF, Mailk Tahir Javaid said that the decision to fix export target for commercial counsellors was old demand of business community, particularly exporters and participants of international fairs and exhibitions.
odel Customs Collectorate of Appraisement-East on the directives of Collector Najeeb-urRehman Abbasi has issued the Standard Operating Procedures (SOPs) for recovering of evaded duty/taxes to all the departments concerned. FBR sources informed Customs Today that the SOPs have been circulated in the entire section of Research and Development (R&D) with a view to ensure speedy recovery of the national exchequer in terms of duty/taxes by the end of the month i.e. June, 2014. “The R&D Section asked to check the details of importers’consignments for last three years and also take the clearing agents into loop, who cleared the consignments,”sources added. “SOPs have been prepared in order to attain as much revenue as possible by the end of the Fiscal Year 2013-14,” sources further added. Meanwhile, R&D Section of the Model Customs Collectorate of Appraisement-East has initiated a survey of the industrial and manufacturing units. Collector Najeeb-ur-Rehman Abbasi has issued clear directives to the R&D Section officers in order to conduct a thorough survey of the industrial and manufacturing units to detect the violation of Statutory Regularity Orders (SROs) 670 and 811. FBR sources informed Customs Today that the decision was taken by the authorities concerned after the detection of millions of rupees tax evasion by M/s Royal Enterprises in its consignments during the period of last three years. They further told this scribe that the survey would continue until the end of June and demand notices will be subsequently issued to the importers to recover the outstanding amount. —CT Report
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Customs seizes 106 tonnes of smuggled black tea worth Rs53m Team of Customs Directorate of Intelligence and Investigation raided a warehouse in Jodia Bazaar and recovered 34 tonnes of high quality smuggled black tea worth around Rs 18 million KARACHI
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n order to curb the smuggling of black-tea Pakistan Customs authorities have recovered and conKiscated 106 tonnes of smuggled black-tea all together worth Rs 53 million in last 12 days of June. Information was received by the authorities of Customs Directorate of Intelligence and Investigation that a huge quantity of smuggled black-tea from Afghanistan was stored at different warehouses in certain Bazaars. In the Kirst raid on June 6, a team of ASO, MCC Preventive led by Assistant Collector, Muhammad Wasif Malik recovered and conKiscated 24 tonnes of smuggled black-tea, worth around Rs 15 million during a raid at warehouses located in Bolton Market and its adjacent areas. In the second raid on June 8, a team of Customs Directorate of Intelligence and Investigation raided a warehouse in Jodia Bazaar and recovered 34 tonnes of high quality smuggled black tea, worth around Rs 18 million, which was smuggled through Afghan Transit Trade and other illegal routes. Directorate of Intelligence and Investigation-Customs, Karachi which is led by Director I&I Asif Marghoob Siddiqui, in a joint raid with Pakistan Rangers has recovered and conKiscated 48 tonnes of smuggled black tea
— Exclusive Customs Today photos
MCC Appraisement East issues SOPs for revenue recovery
Dg I&I Lutfullah Virk
following the directives of Dg I&I Customs Luftullah Virk, Directorate of Intelligence has confiscated smuggled goods worth over Rs 400 million in three months
Director I&I Asif Marghoob Siddiqui worth more than Rs 20 million from the warehouses located in Joria Bazaar. It is worth mentioning that the Directorate of Intelligence and Investigation- Customs by following the directives of Director General Intelligence and Investigation-Customs Luftullah Virk has conKiscated smuggled goods worth over Rs 400 million in last three months. Sources informed Customs Today that the Directorate of I&I has strict directives from DG Luftullah Virk to eliminate the menace of smuggling in order to facilitate the trade and save national exchequer form being dented.
ADC Wasif Malik
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04 NATIONAL
JUNE 24 - JUNE 30, 2014
Naveed Ilahi assumes additional charge
ISLAMABAD: Deputy Director Muhammad Asif of Directorate General of Intelligence and Investigations-Customs, (Headquarters), Islamabad, has relinquished charge of his post. He has left the country for a training course. Deputy Director of Customs Intelligence Enforcement Naveed Ilahi has assumed additional charge of the post of Deputy Director as relinquished by Deputy Director Muhammad Asif. Deputy Director of Customs Intelligence Enforcement Naveed Ilahi will continue to serve in his stead until his return.
New policy for increasing exports in the offing KARACHI
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ederal Government is working on inducing a new export scheme/policy for expediting the exports and ensuring facilitation to the exporters. FBR sources informed Customs Today that the draft is being prepared regarding the introduction of new export policy, which is to be presented before the Parliament for approval before July 1, 2014. Sources told this scribe that the DTRE, manufacturing bond and temporary import schemes are to be combined and made a single scheme to ensure facilitation to the exporters. They further informed that the Input-Output Co-efficient Organization (IOCO) has already recommended the federal government in its budget proposals to introduce a combined export policy for facilitating the exporters. It is pertinent to mention here that the Chief Executive Officer (CEO) of Trade Development Authority of Pakistan (TDAP), S M Muneer has shown his determination to enhance the exports of the country at $ 50 million dollar by the end of 2017.
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fBR may suffer millions of rupees loss in share of ST ederal Board of Revenue is going to suffer a loss of millions of rupees in share of sales tax (ST) by the end of fiscal year 2013-14. Sources informed Customs Today that FBR may experience the loss of Rs 321 million due to the shortfall in recovery of sales tax in the current fiscal year 2013-14. Commenting on the cause of revenue shortfall in share of Sales Tax, the sources told this scribe that FBR was facing shortage of recovery in Sales Tax due to the absence of proper tabulation in Duty/Taxes Remission on Exports (DTRE), Appendix-I form in last three years from 2011 to 2014. They further revealed that the Collectorates have held several meetings in this regard and formulated a strategy in order to recover millions of rupees in share of Sales Tax by raising demand notices to different exporters. It informed this scribe that the high authorities of FBR have issued clear directives to the officers concerned of Pakistan Customs and Inland Revenue Services (IRS) to reduce the difference by the end of FY 2013-14, so that the revenue collection could be raised. —CT Report
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Reforms in TDAP underway to boost exports: Khurram
Adjudication-II issues ONO against M/s Hinah Impex
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Commerce Ministry will choose particular overseas markets on priority and then utilise resources extensively along with manpower and effective marketing to further the country’s export potential ISLAMABAD
MuHAMMAD uSMAN www.customstoday.com
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eforms in the Trade Development Authority of Pakistan are underway to enhance exports of the country. A working committee has been formed headed by Commerce Secretary to rectify all kinds of matters in TDAP. Federal Commerce Minister Khurram Dastgir said this during a meeting with Commerce Secretary Arbab Shahzad, TDAP Chief Executive OfKicer SM Muneer and TDAP Secretary Rabia Javery. He said that the committee was expected to issue recommendations soon. Dastgir said that proper action has been taken against corrupt individuals, whereas, stricter measures will be taken in this regard. The commerce minister informed that a new model is presently being worked out at to utilise export development funds more appropriately so that the resources can be equitably distributed for the removal of hurdles in the promotion of exports. He said that Pakistani products need to be marketed in a better manner. Dastgir said that Commerce Ministry will choose particular overseas markets on priority and then utilise resources extensively along with manpower and effective marketing to further the country’s export potential towards those particular overseas markets.
A new model being worked out at to utilise export development funds more appropriately Referring to administrative reforms in TDAP, federal minister said that experts from private sector will be recruited into TDAP. Experts will also be consulted on value addition to products. He said that according to vision of the Prime Minister, private sector is considered an ally of the government. The minister said that the PM, by appointing a well-reputed exporter and businessman as head of TDAP,
he Collectorate of Customs Adjudication-II has issued Order-inOriginal (ONO) against the importer M/s Hinah Impex in case of misdeclaration on import of wedding material having total cost of $ 45,120. The importer has attempted to evade the revenue amounting to Rs 1,420,591 while the goods valued to the tune of Rs 4,524,456. A penalty of Rs 300,000 is imposed on the importer under clause (14) and 14A of the Section 156(1) of the Customs Act, 1969. The importer M/s Hinah Impex through its clearing agent namely M/s Hasnain Sons (CHAL-2256) had electronically filed Goods Declaration vide GD No. KAPE-HC-98570-05052014 for the import of wedding material at total declared invoice value of $ 3,330. Pakistan Customs authorities in order to check as to whether the importer had correctly paid the legitimate amount of duties and taxes, the under reference Goods Declaration was selected for scrutiny in terms of Section 80 of Customs Act, 1969. Scrutiny of the Goods Declaration in the light of examination report revealed that the importer had mis-declared in terms of value and origin of the goods. On physical examination of the goods, an original invoice was found from inside of the container of $ 45,120 with the difference of $ 41,790. In addition, the importer had also declared the origin of the goods as UAE and on the physical examination, the goods were found asTaiwanese. The importer had, therefore, contravened the Customs Act, 1969; Sales Tax Act, 1990 and Income Tax, 2001 under Sections 79(1), 32(1), 32(2) and 32(A) under Section 33 and 148. The importer was also punishable under clause 14, 14(A) and 45 of Section 156(1) and clause (C) of the Section 33 and 148. The Additional Collector, Muhammad Sami ul Haq in his judgment stated that “I am convinced that the charges levelled in the show-cause notice stand established. —CT Report
has expressed his full conKidence in the private sector so that better management procedures can be amalgamated into government’s institutional management. TDAP CEO briefed the minister of institution’s performance while pointing out the issues confronting its smooth proceedings. He thanked the government on the occasion for laying its trust in the private sector and appointing him to a responsible designation.
Secy Enforcement & Coordination seeks appropriate measures against oil, diesel smuggling KARACHI
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ecretary Enforcement and Coordination Zubair Shah, through a letter, has asked the Chief Collector of Enforcement-South Muhammad Nazim Saleem to evolve a comprehensive strategy and taking appropriate action in order to curb illegal smuggling of oil and diesel from Iran. In the letter, Secretary Enforcement and Coordination Zubair Shah has also
given reference to the letter no. UO 7(11) DS-(E-11)/2014 issued by the Prime Minister’s Secretariat in which it was stated that effective measures against the smuggling of petrol and diesel from Iran. The letter further stated that the Pakistan Customs and FBR should arrest those persons who were involved in the said crime which causes heavy loss to the national exchequer speciKically through smuggling the huge quantity of petrol and diesel from Iran. It is pertinent to mention here that Pakistan Customs with the assistance of Pak-
Customs and fBR should arrest the persons involved in smuggling
istan Rangers, Sindh Police and other law enforcing agencies had launched a crackdown on illegal smuggling of oil and diesel from other countries, in which more than 50 illegal petrol pumps had been demolished within the jurisdiction of the port city of Karachi by the authorities concerned. However, it has been observed that the illegal smuggling of Iranian oil and diesel has once again gained momentum and illegal petrol pumps have again started working in the outskirts of the city.
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NATIONAL 05
JUNE 24 - JUNE 30, 2014
China to finance, develop gwadar airport
ISLAMABAD: The government has informed the Senate Standing Committee on Finance that the financing and development of Gwadar International Airport had been “taken over by China” and that the Civil Aviation Authority will not be involved in the process. In addition, the controversy over the change in the route of the $35 million Pak-China Economic Corridor deepened as government officials continued to contradict each other over the reasons for the change.
Rs500m recovery: FBR issues deadline to Gepco SIALKOT
CuSTOMS TODAY RePORT
Central region's customs duty collection shows sluggish growth
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Model Customs Collectorate of Appraisement, Lahore collects Rs 12,970m during FY 2013-14 against Rs 15,997m, missing target for the year by 13 per cent LAHORE
M HAYAT
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entral Region of Pakistan Customs has collected total customs duty of Rs 30,147 million for the Kiscal year 2013-14, up 6 per cent against Rs 28,462 million during the same period last Kiscal year. However, central region seemingly missed the set target of Rs 33,798 million by 11 per cent. Model Customs Collectorate of Appraisement, Lahore has collected Rs 12,970m during FY 2013-14 against Rs 15,997m missing target for the year by 13 per cent while the collectorate attained a growth of 8 percent during the same period last year. Meanwhile, the Collectorate of Preventive, Lahore, collected Rs 5,024 million against a target of Rs 5,045 million. The collectorrate gathered Rs 4,025 million during the same period of last FY. The Collectorarte of Preventive showed a handsome growth of 25 per cent during the last year while hardly achieved the target this year. Model Customs Collectoarte of Multan also missed the target by 9 per cent collecting Rs 9,535 against the target of Rs 10,463. While, during the same period last Kiscal year the collectorate earned a growth of 4
— Exclusive Customs Today photo
BR has issued final notice to Gujranwala Electric Power Company (Gepco) warning of the last dead line of two weeks for clearing its outstanding arrears by June 30, 2014. According to senior FBR officials, Gepco is a major defaulter of Rs 500 million, as Gepco had collected Rs 250 million as sales tax and Rs 250 million as IncomeTax from the consumers through the monthly electricity bills during the fiscal year 2013-14. However, Gepco had not yet paid Rs 500 million to FBR despite the repeated recovery notices issued by the central revenue body. Gepco was bound to ensure the timely deposit of the big amount to FBR at the earliest, officials added. FBR has warned Gepco to clear its prolonged pending arrears by June 30, 2014, otherwise, the revenue body will freeze its bank accounts deducting the chunk after the deadline. Senior FBR officials also added that FBR has recovered Rs 9.1 billion from Gujranwala region out of its total recovery target of Rs 10.15 billion set for the fiscal year 2013-14.They disclosed that as many as 13 special recovery teams were striving to recover the pending arrears of Rs 1.5 billion till June 30, 2014. Official sources revealed that FBR has recovered Rs 5.83 billion as income tax, Rs4.28b as sales tax and Rs3.5b as federal excise duty during the ongoing special recovery campaign in Gujranwala region. Several owners of factories and private hospitals were defaulters of Rs 200 m.
The Collectorarte of Preventive shows a handsome growth of 25pc last year while hardly achieves the target this year
per cent. Model Customs Collectorate of Faisalabad showed a bad performance, missing the target by 31 per cent while during the same period last Kiscal year the collectorate had attained a growth of 30 per cent. The collectortate gathered on Rs 1,593 against the target of Rs 2,313 while during the same period last Kiscal year the collectorate had Rs 2,289 against the target of Rs 2,074. Customs top ofKicials linked the bad performance of Multan and Faisalabad collectorates to falling imports of oil at the collectorates. “Multan and Faisalabad are largely dependent on oil import. This would give a tough time due to hefty reduction of imported oil’s clearance at these two collectortaes,” Chief Collector of Customs Central Region, Rozi Khan Burki told this scribe. “Till the last Kiscal year the ratio of imported and indigenous oil ratio was 80 and 20 per cent respectively. However, the ratio of imported oil has squeezed to 50 per cent while local oil consumption has increased to 50 per cent, creating a gap of 30 per cent,” he said. Chief Collector said, “It is otherwise good for the Pakistani economy as it is saving valuable foreign exchange reserves.” “Nevertheless, we need revenues which is exclusively generated by the clearance of imported oil,” the chief collector explained.
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— Exclusive Customs Today photos
06
SPECIALREPORT
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SPECIALREPORT 07
JUNE 24 - JUNE 30, 2014
ISLAMABAD
MuHAMMAD fAIZAN www.customstoday.com
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enate Standing Committee on Finance Chairperson Nasreen Jaleel has demanded that all monetary matters should be transferred to the upper house of the Parliament while national law pertaining to debt limit should be acted upon in letter and spirit. She lauded the performance of the Federal Board of Revenue, saying that the board efforts for tax collection were commendable which was evident from the 15 percent increase in overall revenue collection. Talking to the Customs Today exclusively, the MQM lawmaker pointed out that Nadra had data of 3.9 million potential non-taxpayers, asking the government to bring them into tax net. Nasreen Jaleel stressed the need for taxing the rich, saying that taxes on luxury vehicles should be increased. “The government intentions and direction both are right but the magnitude of problems is so enormous that the government would have to change its priorities to cope with them,” suggested the Senate Standing Committee chief. “Budget 2014-15 is a good endeavour but not much is expected to change in favour of people as fund allocation for health and education sector has not been given due signiKicance,” she commented.
She claimed that the government had failed to increase the tax net, adding that bringing back assets from foreign countries by politicians in line with the Lahore the High Court’s verdict would change fate of the country. The MQM lawmaker emphasized that the practice of tax exemptions should end and the tax laws should be implemented without discrimination. The Senate Standing Committee chairman also stressed the need for making the agricultural tax a federal subject, saying that some lawmakers having vested interest, did not let the agricultural tax to be a federal subject. Nasreen Jaleel added that privileges should be announced for the agricultural sector which was the backbone of the national economy. She questioned the ground for withholding tax exemption on iron scrap only? Adding that copper, bronze and silver should also have been extended similar exemptions. “Look one thing is now very much clear that Karachi Airport incident has left little room for talks with Taliban,” she declared. About ever-rising power tariff, she declared that the electricity tariff should not be increased unless there was loadshedding in the country. About revival of sick public sector entities, the Senate Standing Committee chairman declared that the government had appeared unable so far to revitalise Railways, PIA and Steel
Mills which were eating away at precious public money, adding that rejuvenation of these sick public entities would help to save billions of rupees funds which could be diverted for the development of education and health sectors. To a question, Nasreen Jaleel pointed out that awarding bulk of big development projects to the Punjab province was causing resentment among other provinces, adding that the Federal government should also take into account welfare of the small federating units to eliminate their sense of deprivation. “If Punjab CM Shahbaz Sharif is allowed to receive foreign assistance directly, the privilege should also be allowed to other provinces as well,” she stressed. Commenting on the government’s performance, Nasreen Jaleel averred that the government had inherited Kinancial crisis, adding that its performance in this regard remained satisfactory over the last one year. “Appreciation in the value of rupee is a good omen although it has affected our exports in a negative manner,” the MQM senator remarked, adding that its beneKits, however, in the long run would be greater. “To promote a n d strengthen the tax culture, Infor-
mation Technology should be fully availed and utilised and all private and government institutions should be inter-connected through e-link,” the Senate Standing Committee chairman suggested, adding that it was time for the nation to wake up and think as to how the country could be developed without promoting the tax culture. Nasreen Jaleel described Karachi as the economic lifeline of the country, warning that the country would continue to loss precious revenue if the terrorism was not eliminated. We are in the midst of a dangerous situation, surrounded by multifarious crises and concrete planning is required to steer the country out of the quagmire,” the Senate Standing Committee chairman concluded.
The country can not be developed without promoting the tax culture
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08 EDITORIAL
JUNE 24 - JUNE 30, 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
Plan to phase out tax exemptions
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inance Minister Ishaq Dar, in his winding up speech in the Parliament on budget debate, has rightly pointed that the government kickstarted reforms plan to broadening the tax base, abolishing tax exemptions within three years and doing away with un-targeted subsidies in order to achieve growth path on sustained basis. Pakistan had experienced flip-flop growth trajectory in last 67 years where growth increased in some phases but nosedived after pause of few years. On taxation front, the government through the Finance Bill 2014-15 had abolished tax exemptions in order to fetch Rs 103 billion into the national kitty. This process, according to Mr. Dar, would continue over next budgets in 2015-16 and 2016-17 in terms of abolishing more set of exemptions and concessionary Statutory Regulatory Orders (SROs). On the issue of power sector subsidies, the minister has argued that the government had provided Rs 300 billion subsidy in the outgoing fiscal year in order to protect the consumers using electricity up to 50 units with no increase in tariff and less increase for consumers using up to 200 to 300 units. The amount of receivables of power distribution companies increased from their payables. Keeping in view this situation, Prime Minister Nawaz Sharif had constituted a committee with the mandate to accelerate the process of recoveries on account of power bills. There will be some sectors and products where exemptions and concessions will continue to exist in years ahead such as on import of petroleum products and fertilizer as the import duty would remain concessionary and separate chapter of Customs Act will be introduced to protect these relief measures for common people of Pakistan. The abolishing of tax exemptions and concessionary SROs would be done away in such a way that did not harm common people of the country. The total cost of exemptions and SROs stood at Rs 470 billion per annum and the government had committed with the IMF to phase it out within three years. By end of this reform program, the government will surrender the powers of the FBR to the Parliament for issuing of SROs in order to avoid its misuse. Without broadening the skewed tax base, Pakistan’s fiscal woes cannot overcome overnight. The tax base is so much narrow that out of total 180 million population less than 0.8 million filed their income tax returns, which is pathetically low among the comparable countries of our region. The government is aimed at broadening the tax base by bringing 100,000 new taxpayers into tax net in the fiscal year 2014-15. So far the tax machinery has remained unable to achieve any such target. One should be fair in its analysis that the government has kept hands of tax machinery tied with rope as different lacunas exist in tax system of the country and without removing them the blame is shifted on the shoulders of the tax machinery.
efforts on to achieve revenue target ISLAMABAD
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he FBR will have to collect Rs 16 billion each day till June 30, 2014 in order to achieve the revised tax collection target of Rs 2275 billion for the outgoing Kinancial year. The achieving of revised tax collection target of Rs 2275 billion is quite crucial for Pakistan’s struggling economy under the IMF’s bailout package of $6.67 billion because slippages on account of FBR’s tax collection would push up the budget deKicit envisaged for the Kiscal year, ending on June 30, 2014. The achieving of revised tax collection target of Rs 2275 billion is also important keeping in view Kixation of next year’s ambitious collection target of Rs 2810 billion for the Kiscal year 2014-15. In case of failure in netting Rs 2275 billion, the base of collecting the target of Rs 2810 billion will be torn apart so next budget targets especially on front of fiscal side largely depends upon
the FBR’s consistent performance in remaining period of outgoing as well as in coming financial year. Under the IMF agreement, Islamabad is agreed to restrict the budget deKicit at 5.8 percent of the Gross Domestic Product (GDP) for the current Kiscal year. The budget deKicit is calculated on the basis of difference between country’s overall tax receipts and expenditures incurred during the course of the Kinancial year. Initially, the government had envisaged FBR’s tax collection target at Rs 2475 billion for the outgoing Kiscal year which was revised downward to the tune of Rs 2345 billion in accordance with the assessment done by experts of Fiscal Department of the IMF. This tax target was further slashed down to Rs 2275 billion during the last review talks held between Pakistan and the IMF high-ups in early May at Dubai. The impressive collection on account of non tax revenues had rescued the government in a big way that helped the government to restrict the budget deKicit largely in line with the IMF’s en-
The achieving of revised tax collection target of Rs 2275 billion is also important keeping in view fixation of next year’s ambitious collection target of Rs 2810 billion for the fiscal year 2014-15
visaged target for the current Kiscal year. The FBR had so far collected Rs 2115 billion in Kirst eleven months and 20 days (from July 1, 2013 to June 20, 2014) on account of all major taxes against a collection of Rs 1825 billion in the same period of the last Kinancial year. “We have so far achieved a growth of 16 percent and quite conKident that the FBR will achieve its desired tax collection target of Rs 2275 billion till June 30, 2014,” FBR’s Senior Member IRS Shahid Hussain Asad said. The FBR had collected Rs 1946 billion in the last Kinancial year 2012-13. The FBR had collected Rs 121 billion in last 10 days of June 2013 in order to jack up its collection up to Rs 1946 billion against collection of Rs 1825 billion in Kirst eleven months and 20 days of June. “Against the tax collection of Rs 121 billion achieved by the FBR in last 10 days of previous Kiscal year, the FBR will have to collect Rs 160 billion, which seems doable target for the tax machinery,” said the sources.
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SIALKOT
JUNE 24 - JUNE 30, 2014
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British High Commissioner visits Sialkot
SIALKOT: The British High Commissioner to Pakistan, Mr. Philip Barton CMG OBE, visited Sialkot and held a range of trade related meetings with prominent business leaders. The British High Commissioner visited the Sialkot Chamber of Commerce and Industries and met officials including the Chamber’s President, Dr. Sarfraz Bashir, to talk about potential trade opportunities for British firms. He also visited the Surgical Instruments Association of Pakistan and the M. H. Geoffrey & Company and Malik Sports.
hief Commissioner (Inland) Revenue Sialkot Abdul Rehman Dogar has assured the Sialkot based surgical instruments manufacturers and exporters the early clearance of all the prolonged pending rebate claims, income tax and sales tax claims, enabling them to work hard with full devotion, dedication and complete peace of mind for increasing the national exports, besides, giving a boost to the national economy. He made this assurance while addressing an important meeting of the surgical exporters held here. He added that all the tax-related perturbing problems of the Sialkot exporters would be solved amicably by taking then into confidence. He said that all the pending cases of duty drawbacks of Sialkot exporters would be resolved as soon as possible and this step would be helpful in assuring the smooth flow of cash capital in Sialkot’s export oriented industries, paving their way to flourish. Chief Commissioner (Inland) Revenue Sialkot Abdul Rehman Dogar also visited Surgical Instruments Manufacturers Association of Pakistan (SIMAP) here. He discussed in details the matters of mutual interest with the surgical instruments manufacturers, vendors and exporters. He also assured the surgical exporters to make all-out sincere efforts to resolve the prolonged delayed issues of income tax and sales tax refund claims being confronted by more than a century old surgical industry of Sialkot. On this occasion, Chairman SIMAP Bilal Ameen Chughtai demanded early payment of all the sales tax and income tax refund claims of Sialkot based surgical exporters. —CT Report
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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
facilitating exports
SDPT develops own fleet of 100 customs bonded vehicles: Ishaq Butt SIALKOT
ZAfAR MALIK
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hairman Sialkot Dry Port Trust (SDPT) Muhammad Ishaq Butt has claimed that SDPT has been handling exports to the tune of billions of rupees annually, saying that future of Sialkot Dry Port was very bright, as the exports from here would further be increased in near future. Talking to Customs Today at his ofKice here, he said that SDPT was declared winner of Award of Excellence by procuring most number of votes from the freight forwarders across the country as most efKicient dry port in Pakistan. Being Chairman of SDPT, he received award from Chairman Port Qasim Authority Karachi on behalf of Ministry of Ports and Shipping. Muhammad Ishaq Butt said that the Sialkot Dry Port Trust has the unique honour of being the Kirst ever dry port established in private sector in Asia in 1985, saying that its establishment was a result of sincere collective efforts of progressive exporters of Sialkot, the ofKicials of Pakistan Customs and allied departments as well. He said that main aim of this dry port was to provide customs clearance facilities to exporters and importers of this region at their door steps. He said that due to ex-
— Exclusive Customs Today photo
Chief Commissioner IR assures clearance of rebate claims
emplary mutual cooperation and understanding amongst the exporters, importers, management and staff, this institution has achieved unprecedented success. Chairman SDPT committed to provide excellence and efKicient services, saying that with the latest equipments, the Sialkot Dry Port Trust was progressing by leaps and bounds. SDPT has developed its own Kleet of 100 customs bonded vehicles
which is the Kirst largest bonded carriers in private sector. The One Window Operation has facilitated the exporters by ensuring clearance and dispatch of export consignments on the same day, he revealed. “Its strategic location is such that it has beneKited main industrial cities of Sialkot, Gujranwala, Wazirabad and Gujrat, in providing export-related facilities at their door steps”, he added.
Sialkot Dry Port is keeping pace with technological advancement in information technology and is providing online tracking facility to its valued customers, who can access information of cargo in transit through the internet. The state-of-the-art arrangements are available at SDPT for safe and sound transportation of cargo. Muhammad Ishaq Butt, who is also the Chairman of All Pakistan Dry Ports Association, disclosed that the management of SDPT is seriously considering providing package-related facilities to the exporters and importers whereas the SDPT will take full responsibility to deliver the export consignments to their shipping lines. The process of handling of export and import from the arrival to dispatch is now entirely computerized as well as billing of all exports and imports to avoid manual errors. For the secrecy of documents we have security codes on our computers. All the information of our clients is keep secret. He revealed that the total number of containers handled in Asian ports is estimated to reach 492 million twenty-foot equivalent unit (TEU) by 2015, and the transshipment volume will comprise 109 million TEU of this total. The growth of intraregional trade and the expected growth of containerized transport in Asia clearly demonstrate the need for improved intermodal freight transport in the region.
Appeal to review Section 40-B of Sales Tax Act To, Federal Minister for Finance, Govt of Pakistan, Islamabad Respected Sir, I would like to draw your kind attention towards a serious issue pertaining to the Section 40-B of Sales Tax Act, 1990. Through this letter, I would like to inform you that the unbridled powers given to the ofKicers of Federal Board of Revenue (FBR) under Section 40-B of Sales Tax Act, 1990 would statutorily be enforced after passage of Finance Bill 2014 through the Parliament. Sir, these powers are against the government policy in order to minimize direct contact between a tax collector and the taxpayer as it may be resulted in increasing corruption and tax evasion. Giving more powers to
FBR ofKicers under Section 40-B would badly affect the trade and industry as it totally negates the concept of self-assessment and spreads institutionalized corruption. Sir, it is surely into your knowledge that the Federal Ministry for Finance had already suspended the implementation of controversial SRO 351 (1)/2014 which was issued without the consulting the business community. Therefore, on behalf of the business community, I demand the federal minister to review the discretionary powers given to the FBR ofKicers under Section 40-B and formulate businessfriendly policies in consultation with all the stakeholders. Yours’ sincerely, Yousuf Yaqoob Prince, Vice Chairman of SITE Association, Karachi
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10 PICTORIAL
JUNE 24 - JUNE 30, 2014
PgMeA seeks ban on export of blue split leather
SIALKOT: The Pakistan Gloves Manufacturers and Exporters Association (PGMEA) has urged the government to ban export of blue split leather “to save the gloves industry from collapse”. PGMEA chairman Shehzada Ibne Iqbal Syed said that shortage of split leather had drastically raised its price. “We have huge foreign orders of gloves, but due to unavailability of the material the business community is confronting multiple problems,” he said.
CustomsdonatesRs3.5mfordeservingIBAstudents KARACHI
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ceremony to mark a support initiative by Pakistan Customs for the students of Institute of Business Administration (IBA) from rural areas took place last Wednesday at the Directorate General of Training and Research (DGTR). Former Governor State Bank of Pakistan (SBP) and Director of IBA Dr Ishrat Hussain was the chief guest on the occasion. Chief Collector Appraisement-South Nasir Masroor Ahmed, Collector MCC Appraisement-East Najeebur Rehman Abbasi, Collector MCC AppraisementWest Muhammad Saleem, Collector MCC Preventive Syed MuhammadTariq Huda, Director DGTR Ghulam Ahmed, Director General TransitTrade Khawar Farid Maneka, Director Input-Output Co-efficient Organization Muhammad Fateh Shaikh, Director Customs Valuation Surriya Butt, Director Directorate of Reforms and Automation Abdul MajidYousfani, Additional Collectors, Deputy Collectors, Assistant Collectors and other Customs officials were also present on the occasion. Speaking at the ceremony, Dean of IBA Dr Ishrat Hussain said that the progress and development of the country cannot be made possible without elimination of dual education standards, adding that the less privileged talented youth has equal rights to get quality education. IBA Dean said that the top of priority of IBA administration was to expand the physical scenario of the institution by introducing new faculties in it, adding that the IBA has introduced 13 new faculties in the institution. “We have also introduced undergraduate programmes in the faculties of economics, political science, Information Technology and others,”he added. Dr Ishrat further informed that IBA has reached a student limit of 3400 from 1800, adding that four hostel buildings having accommodation facility of 250 students.“We have the privilege of having state of the art IT faculty in the institution established at a cost of around Rs 500 million,”he informed. Highlighting the performance of IBA, Dr Ishrat further informed that the institution was running two programmes simultaneously i.e. NationalTalent Hunt Programme, in which the
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— Exclusive Customs Today photos
address said that Pakistan Customs is committed to serve the less privileged society. He said that Customs officers had donated Rs 3.5 million for deserving students belonging to the rural areas to encourage their educational pursuits at IBA.“We have pledged to donate a day’s salary every year for the less privileged seven students, which makes Rs 4 million all together,” he added. Director DGTR Ghulam Ahmed said that the Federal Board of Revenue was also playing its responsibilities in social circle. He said that Pakistan Customs is going to continue bearing the education expense of 7 IBA students from rural areas.
institution was mentoring the student and the other one was Sindh Foundation Programme through which the institution was providing six months training to students for their aptitude tests.“The donation of Pakistan Customs towards less privileged and downtrodden students is priceless and I am grateful for the entire management of Pakistan Customs for this generous act,” he added. He hoped that the other governmental institutions may come forward and play their due role in strengthening the down-trodden society of the country. Collector MCC Preventive Syed Muhammad Tariq Huda in his welcome
Curbing menace of corruption
FBR’s Integrated Management Unit may face resistance ISLAMABAD
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or the of eradication of corruption within the institution, Federal Board of Revenue has decided to form Integrity Management Unit (IMU) which will be headed by Director General of Intelligence and Investigations-Customs Lutfullah Virk. Formation of the unit is a pol-
icy decision which was approved during a meeting of Board in Council which was presided over by FBR Chairman Tariq Bajwa. No new ofKicials will be inducted into the unit. Instead ofKicials of good repute from Intelligence and other FBR departments will be appointed. IMU will not be able to take any action by itself. Its jurisdiction will include investigation after which it will submit report to the FBR authorities. High ofKicials of
the Board will then decide as to what decision should be taken. Despite introduction of a mechanism to get rid of black sheep within the institution, some factions have showed their concerns that ofKicial and institutional politics can get involved into making wrong use of the mechanism. Some ofKicers of the FBR have said that a check and balance system already exists in the institution. Every ofKicer
knows about his/her subordinates and they can take action against them. According to sources, Integrity Management Unit’s job will be to sort out corrupt ofKicers in FBR and initiate investigations against those ofKicers who have been most complained of. The method of investigation will start with the enquiry of Kiles which have been approved by such ofKicers. IMU will also be able to check Kield of-
Kicers and the Kiles in their possessions. Sources said that checking of Kiles will be the prime method of investigations. In case any kind of concession will have been granted in matters pertaining to customs duty, income tax or excise duty, the unit will start inquisitions of the ofKicial concerned. File is one thing which can easily reveal that to what extent beneKits have been granted to whom, sources added.
www.customstoday.com JUNE 24 - JUNE 30, 2014
New taxes on CNg industry draw concern
ISLAMABAD: The All Pakistan CNG Association (APCNGA) said that the Khyber Pakhtunkhwa (KP) government has imposed additional taxes on the ailing CNG sector in the budget 2014-15 that will increase the cost of fuel and discourage investors. KP government has slapped tax up to Rs15,000 on owners of CNG filling stations and petrol pumps while another tax of Rs5,000 per year have been imposed for using generators during the electricity loadshedding which is discrimination, said APCNGA Central Chairman Pervaiz Khan Khattak.
CARTOONSSPECIAL 11
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12
JUNE 24 - JUNE 30, 2014
fBR seizes umar Akmal’s bank accounts
LAHORE: FBR has seized 4 accounts of cricketer Umar Akmal in Dubai Islamic Bank. Sources informed that Umar Akmal had to pay Rs 3.6m tax to FBR. The cricketer has been evading tax for the last three tax years. Regional Tax Office Lahore has seized four account of Umar Akmal. Meanwhile, the office has asked 27 banks to provide all information about monetary assets of the cricketer present in the banks.
SeCuRITY CONCeRNS
Authorities mulling over relocation of customs laboratory Chief Collector Nazim Saleem asks MCC Preventive Collector Tariq Huda to purchase biometric system by utilizing Trouble Asset Relief Programme funds to make the security of Customs House stringent KARACHI
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ustoms authorities have expressed their concerns over the existence of Customs Laboratory in the premises of Customs House, Karachi owing to law and order situation in the port city in the aftermath of recent attacks at Karachi Airport. FBR sources informed Customs Today that the Chief Collector of Enforcement-South Muhammad Nazim Saleem, through a letter, has urged the Collector of Model Customs Collectorate of Preventive, Syed Muhammad Tariq Huda to re-locate the Customs Laboratory from the Customs House to any other place in this sensitive law and order situation. It may be mentioned here that
Pakistan Customs Laboratory is located on the 10th Kloor in the Customs House Building and has various inKlammable chemicals and substances, which may be harmful in case of any tragic incident. “The Chief Collector has asked MCC Preventive Collector Tariq Huda to purchase biometric system by utilizing Trouble Asset Relief Programme funds in order to make the security of Customs House stringent,” sources added. Customs authorities have tightened security arrangements in and around the Customs House, Karachi owing to threat by the anti-state elements to national assets. The exterior walls of Customs House have been covered by placing the containers and Preventive OfKicers along with sepoys have been deployed at the entry and exit gates of Customs House. A force of Preventive OfKicers and Senior Preventive OfKicers has also been deployed within the premises of
Customs House for checking the iden- and clearing agents should wear their tity cards of visitors. cards as long as they remain in the Customs security guards do not premises of Customs House. allow any visitor except high Earlier, a high level meeting was Customs ofKicer, clearing held at Customs House to review agents and importers the security arrangements and to enter the premmake them more effective. ises of Customs Chief Collector of EnHouse without fo rc e m e n t -S o u t h submitting Muhammad Nazim CNICs and Saleem, Collector Collector Nazim Saleem any other MCC Preventive valid docuSyed Muhamissues security alerts, ments like mad Tariq Huda, owing to prevailing law driving liAnti-Narcotics cense at the Force Director and order situation after entry gate. Brigadier AuthoriMuhammad Karachi Airport attack ties concerned Abuzar, Additional have also made Collector Shafqat Ali it mandatory that Khan Niazi, Assistant the Customs ofKicials Collector Muhammad
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Wasif Malik, Pakistan Rangers and Sindh Police ofKicials were also present on the occasion. It decided that Pakistan Rangers and Sindh police ofKicials would also provide security assistance to the Customs ofKicials, while the ofKicials of security agencies would also continue the surveillance in and around Customs House in plain clothes. Meanwhile, Customs authorities detained six clearing agents for not proving their identity while entering the premises of Customs House, Karachi. It was witnessed that the cards of customs agents had been expired and they were pressurizing the customs sepoys to allow them to enter the premises. Subsequently, customs ofKicials detained all 6 clearing agents but later on they were released.