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vol 1 issue no. 35, 36
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islamabad
SM haider
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F deep waTer porT
best facilities will be available to container ships after completion of the deep water port project to be completed within two years, says Kamran michael | See page 3 |
To increaSe direcT TaxeS
To increase the tax revenue, the first and foremost step is to prevent misuse of tax rebate facility, says mandokhel | See page 6-7 |
TargeTed Survey Soon
FbR is going to launch a targeted survey soon to net rich tax dodgers, says FbR Chairman Tariq bajwa | See page 2 |
ederal Board of Revenue (FBR) has found that the value of dutiable imports in dollar terms declined by 6.5 percent during the first quarter (JulySeptember) period of the current fiscal year, causing worry among the tax managers about achieving the tax target of Rs 2475 billion for 2013-14. A detailed investigation done by FBR reveals that the country’s overall imports increased by 12 percent in dollar terms in the first quarter of the current financial year but the value of dutiable imports went down in a big way. The imports of auto parts and vehicles declined by 23 percent in the first quarter of the current fiscal year mainly because of the amnesty scheme and increased tax rates on auto parts. Many tax experts say that FBR was used to collect over 40 percent taxes at import stage but declining value of dutiable imports was attributed as sign of recession in the economy. But the FBR findings showed that duty free imports were increasing because of Free Trade Agreements (FTAs), Preferential Trade Agreements (PTAs) and concessionary Statutory Regulatory Orders (SROs) so the tax machinery would have to find out ways and means to remove distortions in the tax system and policies of the country. There are many important revenue spinner items such as steel, plastic, some items of foods such as chocolates and others as well as some others which also showed declining trend in the ongoing financial year. The rampant increase in dutyfree imports from China jumped up in the first quarter of the current fiscal year but it mainly increased in those items which were duty-free under FTA regime. When contacted, Member Customs Nisar Muhammad said that they prepared a detailed report for ascertaining facts and reasons behind decline in revenue collection at import stage and would submit it before Chairman FBR Tariq Bajwa for taking remedial measures to improve the situation. Pakistan’s tax revenue-to-GDP ratio, at about 10 percent of GDP, remains among the lowest in the world among non-oil exporters. Tax loopholes, exemptions and conces-
karachi, Tue oct 15 - Mon oct 28, 2013
regd. no, Mc-1381
FBRDIGSOUT REASONSBEHIND THEDECLINE DUTYFREEIMPORTSCAUSEDCUSTOMSREVENUELOSS
MEMBERCUSTOMS
Price Rs. 50.00
sions have left a small pool for taxation. For example, agriculture is mostly outside the tax net, and the number of taxpayers filing income tax returns is very small relative to the size of the population of about 1 percent. In order to resolve the existing difficult situation, the FBR authorities are working on Plan B by revising evaluation rates of those items which are not duty free but play an important role for boosting tax revenues of the country. “We have recently increased fixed evaluation on imports of cosmetics items from 88 cents to $2.5,” said one of the FBR official and added that they were also making efforts to replicate WeBOC on all entry and exit points of the country. The performance of FBR subsidiary, Pakistan Revenue Authority Limited (PRAL), has not been up to the mark so the tax authorities were facing multiple problems to replicate WeBOC in all over the country because unified evaluation system required unified system for clearance in all entry and exit points of the country. “It should have been replicated at this point of time but it got delayed but efforts are underway to come up with unified solution to resolve the issue of under declaration,” said the official. He added that Customs Collectors were directed to share infor-
NISAR MUHAMMAD SAID T HAT THEY PREPARED A DETAILED REPORT FOR ASCERTAINING FACTS AND REASONS BEHIND THE DECLINE IN REVENUE COLLECTION AT IMPORT STAGE . TAX LOOPHOLES, EXEMPT IONS AND CONCESSIONS HAVE LEF T A SMALL POOL F OR TA X ATION.
— Exlusive Customs Today photo
mation with other colleagues about evaluation on which high revenue spinner items were cleared at their points so exchange of information could also bar the way for clearing goods at different rates. According to FBR official data, the revenue collection in shape of Customs Duty declined by Rs 2 billion as it stood at Rs 55 billion during July 1, 2013 to October 3, 2013 compared to collection of Rs 57 billion in the same period of the last financial year.
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02 islamabad
OCTObER 15 - OCTObER 28, 2013
fBr likely to collect rs580b in next quarter
LAHORE: The government has reorganised Federal Board of Revenue (FBR) by giving it more powers which enhanced its performance, economist Dr Khawaja Amjad Saeed said. He claimed that due to new reforms and policies adopted by the FBR, more than Rs580 billion taxes would be collected in the next quarter of the current financial year. Dr Saeed said the FBR has developed its monitoring system and now all financial matters are being monitored on monthly basis in the FBR headquarters.
ecnec okays 9 projects worth rs43 billion
Targeted survey being launched to unearth rich tax evaders: Bajwa
fBr almost achieved Q1 revenue collection target Board aims to add 100,000 more people in tax net no new ST levied on household items Those paying rs200,000 tuition fee will be taxed islamabad
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he Executive Committee of the National Economic Council (Ecnec) has approved nine projects amounting to Rs42.92 billion in the energy, education, health, transport and communications, irrigation and water sectors. The ECNEC meeting was held under the Chairmanship of ishaq dar at the Pm's Office. minister for Water and Power Khawaja asif, minister for information senator Pervez Rashid, minister for Planning, development and Reforms ahsan iqbal, minister of state for information Technology anusha Rehman , senior officials of the federal and provincial governments attended the meeting. The committee approved two projects for Punjab amounting to Rs24.84 billion, three projects for balochistan amounting to Rs8.70 billion, two projects for Khyber Pakhtunkhwa amounting to Rs4.40 billion, a project for sindh amounting to Rs2.08 billion and a national scholarship programme amounting to Rs2.90 billion. The meeting was told that the government of Punjab has started work on two hydel power projects while work on a project of 84mW was inaugurated recently by the private sector. —CT Report
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Overseas Pakistanis remit $55b in 5 years verseas Pakistanis have remitted more than Us $ 55 billion to the country to support their families during the last five years. an amount of Us $13.92 billion was remitted during July 2012 to June 2013 which showed a growth of 5.56 percent as compared with $13.18 billion received during previous fiscal year. according to ministry of Overseas Pakistanis, the size of precious foreign exchange, being remitted by overseas Pakistanis, is showing increasing trend with the each passing year and has touched Us$13.92 billion mark in year 2012-13 from Us$7.81 billion in 2008-09. in fiscal year 2009-10, the remitted amount was $ 8.9 billion and it reached $11.2 billion in 2010-11 and $13.18 billion in 201112. it said no separate data regarding volume or portion of remittances is maintained. —CT Report
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— Exlusive Customs Today photo
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BR has almost achieved its Rs509 billion target set for the Kirst quarter of Kiscal year 2013/14 as it has collected Rs481 billion so far and the total revenue collection target for the current Kiscal year is Rs2,475 billion. FBR Chairman Tariq Bajwa told this to the Senate Standing Committee on Finance head by Senator Nasreen Jalil at Parliament House. Senator Sardar Fateh Muhammad Hasni and Senator Sherala Malik were also present in the meeting.Bajwa briefed the committee that the Board did not impose any new tax to achieve the target. He denied the government has increased sales tax rates from 17% to 19% on dozens of items as was reported by a section of the national media. “There is no question of raising the tax rate by 2%. We’ve changed the mechanism of computation in the value addition of certain products from consumers end to manufacturers,” he said. “This will have no extra impact on consumers, because it is even less by 0.5% as compared to the past,” he added. According to the FBR chairman, around Rs168.02 billion direct tax, Rs235.5 billion sales tax, Rs25 billion in Federal Excise Duty (FED) and Rs52.4 billion in customs have been collected so far. About the conditions set by the International Monetary Fund (IMF), he said the government is working on its commitment with the IMF to bring 100,000 people into the tax net. As many as 1,200 new people have so far been brought under the tax net during the current Kiscal year. He said that FBR has, so far, issued notices to 30,000 people in the past three months for bringing them to the tax net. Of these, only 1,000 or
as many as 1,200 new people have so far been brought under the tax net during the current fiscal year, says FbR Chairman Tariq Bajwa
1,200 people have Kiled tax returns with the FBR, the chairman said. Tariq Bajwa also informed the Senate Standing Committee that the FBR is going to launch a targeted-survey soon to net rich tax dodgers. The FBR is also working on data collection of the people who frequently travel abroad, he added. Bajwa said that the FBR had already approached housing authorities to collect data about investors’ transactions in real estate to identify whether they are paying or avoiding income tax.
The committee was informed that government is considering reducing the duty on material used for production of bulletproof vehicles to facilitate the sector and FBR is working with ministries of Industries and Production and Commerce. The FBR chairman said that the board is also collecting data regarding commercial electricity users which includes shops and ofKices. The FBR has already approached relevant departments for getting relevant data, he added. Bajwa said that information would be collected about artists, players, doctors and lawyers under the survey. The federal tax collection authority has also decided to impose tax on those who are paying Rs200,000 tuition fee annually. Tariq Bajwa said information through expensive private schools would be collected and only those schools in this regard will be targeted who are collecting at least sixteen thousand rupees in terms of monthly fees. There are several schools that are charging high fees but not paying taxes.
FbR to sign moU with provinces to adjust bilateral sT ederal board of Revenue (FbR) is going to sign a memorandum of Understanding (moU) with all the provinces for bilateral adjustment of the sales tax between federation and provinces. FbR Chairman Tariq bajwa, while briefing the senate standing Committee on Finance, said that the board has agreed to the proposal given by the provinces for resolving the issue of input tax adjustment between the revenue collection authority and provinces. The FbR had already convened some meetings with heads of provincial revenue boards in this
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regard. a draft of the moU is being written which would be shared with provinces for comments. it is expected that the moU would be signed between the FbR and provinces during the current month. Under the proposed agreement, the FbR will estimate after each quarter of fiscal year that how much dues are pending with the federation or provinces on account of input tax adjustment. it is pertinent to mention here that Punjab Revenue authority (PRa) and Khyber Pakhtunkhawa Revenue authority (KPRa) have agreed to the proposal of the bilateral input tax
adjustment and will likely to resolve the tax adjustment issues with the FbR soon. Tariq bajwa said that under the 18th amendment and 7th NFC award, provinces are empowered to collect sales tax on services. during the first year the FbR had collected sales tax on services on behalf of the provinces. The sindh Revenue board (sRb) was the first provincial revenue board which started collection of sales tax on services in 2011. later, PRa and KPRa have also started collecting sales tax on services. —CT Report
smuggling not taking place on indian border but Chaman muggling on indian border is insignificant while most of the illegal trading is being carried out on Western borders especially on Chaman border owing to poor law and order situation in the area. Federal board of Revenue (FbR) Chairman Tariq bajwa said this while briefing the senate standing Committee on Finance on the issue of smuggling. He said due to security reasons, it is difficult for the Customs to operate near border areas with limited workforce. The FbR Chairman admitted that the smuggling is a major problem which is difficult to control in these circumstances. bajwa, responding to a query on sales tax refund payments, informed the committee that the FbR has issued sales tax refunds to the tune of Rs 20 billion during current fiscal year. The FbR has decided that the sales tax refund would be issued on first come first served basis under the new procedure of sales tax refund payment, he said, adding, “Transparency has been ensured in the payment of sales tax refund.” Explaining the new audit strategy, Tariq bajwa said that the tax department would issue system generated notices to the units selected for audit. Each electronic notice would contain specific bar-code for identification purposes. —CT Report
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KaRaCHi
OCTObER 15 - OCTObER 28, 2013
iran, china to combat smuggling of radioactive, nuclear materials
TEHRAN: Iran's parliament is going to debate a bill that, if passed, will improve cooperation between Tehran and Beijing in various security fields, including fight against smuggling of nuclear and radioactive materials. The Iranian president has submitted a bill, already passed by the cabinet, to the parliament that will make for the expansion of security cooperation between Iran and China based on a cooperation agreement signed between the two countries in July.
129,213 vehicles imported in 5 years total of 129,213 reconditioned vehicles were imported into the country during the last five years. according to the ministry of Commerce, foreign exchange mounting to Rs 68,081.803 million was collected through the import of reconditioned vehicles in the above period. as many as 4,585 reconditioned buses, coaches and wagons valued at Rs4,915.944 million, 122,352 cars and jeeps worth Rs60,721.73 million, 2,276 trucks valued at Rs2,444.129 million were imported from July 2008 to June 2013. as many as 360 buses, coaches and wagons costing foreign exchange worth Rs309.555 million, 4,551 cars and jeeps valued at Rs2,221.52 million and 482 Trucks worth Rs377.308 million were imported in FY 2008-09. a total of 682 buses, coaches and wagons of the value Rs of 688.815 million 5,630 cars and jeeps costing foreign exchange equivalent of Rs3,095.52 million and 538 trucks worth Rs505.977 million were imported during FY 2009-10. similarly, 749 buses coaches and wagons valued at Rs907.854 million, 10,761 cars and jeeps valued at Rs5,441.19 million and 461 trucks worth Rs583.249 million imported during FY 2010-11. Yet another 1,469 buses, coaches and wagons valued at Rs1,529.36 million, 55,993 cars and jeeps costing Rs26,632.70 million and 360 trucks worth Rs453.757 million were imported during the fiscal year 2011-12. as many as 1,325 buses, coaches and wagons worth Rs1,480.36 million, 45,417 cars and jeeps valued at Rs23,330.80 million and 435 trucks of the value of Rs523.838 million were imported in FY 2012-13. The reconditioned vehicles were imported as personal baggage or on transfer of residences or as gifts. —CT Report
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deep water port to be completed within 2 years: michael
Eastern zone of Port Qasim to start functioning soon Provision of international standard facilities at all sea ports is top priority German company interested in construction of iron & coal berth all sea ports to play the role of “economic gateway of Pakistan” KaRaCHi
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ederal Minister for Ports and Shipping Kamran Michael said that best facilities will be available to container ships after completion of the deep water port project to be completed within two years. This he stated while speaking to Information Secretary of Pakistan Muslim League-Nawaz (PML-N) Sindh Ali Akbar Gujjar in a meeting. Michael said that the PML-N government has started work on different projects for provision of international standard facilities at all sea ports of the country and those ports would play a role of “economic gateway of Pakistan.” Federal Minister for Ports and Shipping Kamran Michael said that efforts were being made for an intime completion of the ongoing development projects while new projects have also been launched for improvement of the shipping facilities at the ports. He said that construction of Port Tower Complex was underway, while initial work for construction of an Expo Centre, a modern shopping mall and a hotel near Karachi port has been completed and these projects would be completed with the partnership of foreign investors.
A German company has showed interest in construction of iron and coal berths at a cost of $40 million while Chinese and Korean investors have also showed keen interest for investment in different projects related to ports and shipping, he said. Eastern zone of Port Qasim would start functioning very soon, he added. Kamran Michael said development of ports would generate employment opportunities and people to people contact will be strengthened between the provinces.
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04 NaTiONal
OCTObER 15 - OCTObER 28, 2013
649,000 smuggling alerts deleted in uk
LONDON: More than 649,000 alerts relating to potential drug and tobacco smuggling into the UK were deleted from a Government system for border controls without being read, an inspection has found. The deletions had a "significant impact" on the ability of staff at the border to seize banned goods and arrest those responsible for smuggling them into the country, the Chief Inspector of Borders and Immigration John Vine said.
Seven blind men and the elephant
new Sros: your interpretation or mine? Some tax lawyers say the new changes in the sales tax regime will benefit only the manufacturers and traders, while the national exchequer will be on the losing side and the taxpayers will get no relief laHORE
naSiM ahMed
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Sro 89
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ou have heard the story of the elephant and seven blind men. Each of them touched different body parts of the animal and gave their own version of the experience. While some said it was a tree trunk, others thought that it was a big snake or a leather bag. Widely differing interpretations of the latest raft of SROs issued by FBR reminds one of the above apocryphal story. Confusion gripped the market as various business lobbies interpreted the tax measures announced by Federal Board of Revenue differently. Some considered it a hike in sales tax rate from 17 to 19 per cent, while others insisted that FBR has introduced 2pc additional tax for manufacturers. A section of traders took the stand that 2pc tax had been imposed on 50 items in which 60pc are electronic items. Before going into details of the market reactions, let us Kirst Kind out what the whole thing is about and what is FBR’s take on the whole issue. FBR has issued statutory regulatory orders (SROs) 895, 896, 897 and 898 for imposing two percent levy of sale taxes on manufacturing of 50 items of daily-use food commodities, waiving off the condition of seeking CNICs, NTNs and addresses of unregistered retailers, reducing withholding sales tax rate on purchases from unregistered persons from 17 to 1pc, and charging 3 percent sales tax on import and supply of fabrics. Through SRO 896(I)/2013, FBR has omitted over 50 items from the Third Schedule of the Sales Tax Act, 1990, and in lieu imposed a 2 percent additional tax on these items to be paid by manufacturers. Under SRO.898(I)/2013, the import and supplies of fabric shall be
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charged to sales tax at the rate of 3 percent. The commercial importers would pay 2 percent value addition tax and 3 percent sales tax i.e. 5 percent sales tax shall be chargeable on commercial imports of fabrics. As per SRO.897(I)/2013, a withholding agent shall deduct an amount equal to one-tenth of the total sales tax shown on the sales tax invoice issued by persons registered as a wholesaler, dealer or distributor. The withholding agent having Free Tax Number (FTN), such as government departments shall, on purchase of taxable goods from persons liable to be registered but not actually registered under Sales Tax Rules, 2006, deduct sales tax at the applicable rate of the value of taxable supplies made. Through another SRO, the rate of withholding tax on goods transport vehicles under Section 234 of the Income Tax Ordinance 2001 has been reduced from Rs5.00 per kg of the laden weight to Rs3.00 per kg.
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according to independent analysts, pakistan has backtracked on its commitment to iMf that it will not issue any new statutory regulatory orders for tax exemption. The Board has explained that 45 items of daily use are not chargeable to sales tax under existing law. The following items are not chargeable to sales tax: vegetables, pulses, fruits, red chillies, eggs, meat, Kish, poultry, poultry feeds, ginger, turmeric, locally produced ware potato, locally produced onion, cereals, products of milling industry, ice, sugarcane, salt, fruit juices, bread, nan, chapattis, sheermal, bun, rusk, agricultural produce of Pakistan not subjected to process of manufacture, milk, yogurt, butter, cream, desi ghee, whey, preparations for infant use, fat Killed milk, writing, drawing and marking inks, erasers, exercise books, pencil sharpeners, geometry boxes, pens, ball pens, markers, pens, pencils and
colour pencils. FBR’s stand is that it has not imposed any new tax on household gas and electrical appliances, tiles, tyres, etc. as these goods are chargeable to sales tax on retail price basis. Sales tax on retail price basis means that sales tax of the complete chain from manufacturer to retailer is paid upfront by the manufacturer. Trade and industry as a whole has opposed the new SROs. President Karachi Chamber of Commerce and Industry Abdullah Zaki has in a statement rejected the additional tax, saying that the industries are barely surviving owing to the slowdown of the economy, uncertain market conditions and deteriorating law and order. He said that the 8-9pc impact of ru-
pee devaluation against the dollar since June had already pushed up the cost of production. FPCCI president Zubair Ahmed Malik has also expressed concern that two per cent increase in GST would result in stoppage of manufacturing activities. Sialkot Chamber of Commerce and industry President Dr. Sarfraz Bashir also condemned the levy of 2 per cent additional sales tax on more than 40 different daily-use items and said that it will affect the consumers adversely. Sarhad Chamber of Commerce and Industry has also opposed the new Kiscal measures. According to independent analysts, Pakistan has backtracked on its commitment to IMF that it will not issue any new statutory regulatory orders for tax exemption. They see the new SROs as a major blow to the drive aimed at documenting the economy and broadening the tax base. It also puts a question mark over the ability of the government to generate sufKicient revenue. The new Kiscal measures are estimated to cause a revenue loss of at least Rs10 billion. This loss may make it more difKicult to meet annual tax target of Rs2.475 trillion. According to some tax lawyers, the new changes in the sales tax regime will beneKit only the manufacturers and traders while the national exchequer will be on the losing side and the taxpayers will get no relief. All things considered, it’s a pretty mess that has been created. FBR says it has acted in aid of the business community. But the latter does not agree. What FBR construes as a positive step has drawn negative reactions from its supposed beneKiciaries. From the confusion the ultimate sufferers will be the common consumers who will be exploited by unscrupulous elements in the business community. The only way out of the imbroglio is for the authorities to sit down with the representatives of trade bodies to have the new measures thrashed out in detail and any doubts, distortions and anomalies removed.
fBr imposes 2pc gST at manufacturing stage controversy has been erupted over the FbR’s latest statutory Regulatory Orders (sROs) as tax machinery says that it would result into reducing the prices of certain items but many others believe that the board imposed extra 2 percent GsT at manufacturing stage. Chairman FbR Tariq bajwa said that the government took decision to charge GsT at the stage of manufacturing with the purpose to ensure ease of doing business in Pakistan and prices of around two dozen items should be reduced at the retail stage. Talking to this scribe, he said that instead of increasing prices of items, FbR facilitated business class with their consultation. Now there will be no need to publish price at
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retail stage. When asked about extra 2 percent GsT imposed at manufacturing stage, Chairman FbR explained that final due tax would be charged at manufacturing stage instead of getting at all other stages down to the level of retail stage. “These are concessionary sROs which should result into reducing prices of certain number of items,” he said. However, another senior member of FbR said that sales Tax sRO 895, 896, 897 and 898 issued by the FbR were meant for providing relief to business community in line with Finance minister’s decision for moving towards this objective. Now at the manufacturing stage, the FbR will charge 19 percent GsT instead of 17 percent but there
would be no further value addition tax at retail stage. Earlier, there was value addition of 4 percent charged at retail stage while now the tax burden reduced to just 2 percent under the newly devised mechanism. The FbR’s enforcement at retail stage is area of concern and basically the tax machinery made another deliberate effort to do away with the business of input adjustment mafia as frauds were committed for claim extra ordinary input adjustments at the cost of national exchequer. FPCCi, KCCi and Trade associations of all these goods approached FbR with request that it is practically impossible for these sectors to comply with the requirements of printing retail price on each and every
item to be sold in the market. These sectors also stated that the prices of these goods vary from market to market due to many circumstances, which makes it even more difficult to comply with the requirements of charging sales tax on retail price basis. FPCCi, KCCi and Trade associations requested that an alternate mode of collection of tax from dealers, distributors and retailers of these goods may be devised but the condition of charging sales tax on retail price basis may be done away with. in line with the requests of the these sectors, FbR omitted these items from the Third schedule to the sales Tax act, 1990, and in its lieu imposed a 2% additional tax on these items to be paid by the manufacturers. —CT Report
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NaTiONal
OCTObER 15 - OCTObER 28, 2013
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fBr comes down hard on illicit cigarette traders
LAHORE: Smuggled cigarettes without the health warning continue to harm the health of the citizens who are unaware of the dangers of smoking. Understanding the severity of the issue, FBR has come down hard on the illicit cigarette traders and the Home Department Punjab has also directed action against this menace. Strict action has been ordered against smuggled cigarettes, which are being sold openly in the domestic market violating applicable laws.
anti-smuggling force seizes rare Buddha statue laHORE
M hayaT
www.customstoday.com nti-smuggling wing of lahore model Customs Collectorate mCC has seized a statue of buddha at the allama iqbal lahore. according to details the statue was being smuggled to Karachi from lahore. sources said that the statue of buddha was purchased from Taxila and was being smuggled to Karachi for sending abroad. The sources said that Customs antismuggling unit under the surveillance of Customs inspector Nasir saeed conducted a raid immediately after receiving the information and confiscated the statue at the airport. The weight of the statue is 62 kg and height is 3 feet. The statue is made of a mixed medium, Taxila clay fortified with gray stone. Official sources said that antique department’s experts have examined the statue thoroughly and would report whether it is original or counterfeit. The sources said that in both cases the statue which is an artistic creation, would be confiscated and deposited with the government Experts say that smuggling of the antiquities has become a global issue and the major affectees are poor nations like Pakistan which have a rich heritage but have limited resources to protect it. sources say that that the looting of Pakistan’s historical treasures is going on unchecked and beautiful l sculptures of important historical personalities of past are being smuggled out of the country. a report said early last year a large container filled with nearly 400 artifacts in the southern port city of Karachi in July was being trucked north to be smuggled out of the country. about 40 percent of the statues, sculptures and other material were found to be genuine, including nearly 100 buddhist sculptures up to 1,800-years-old worth millions of dollars. The report further said that police arrested several people connected to the seizure in Karachi in July, but they have yet to be formally charged. Two men who were arrested last October for excavating a statue of buddha from a site in swat were only fined about $50 each, far less than the maximum punishment of a year in prison and a fine of more than $800 they could have received, the report said. The report also disclosed that some Pakistanis are making replicas that they often try to pass off as the genuine stuff. They suggested that in order to preserve the important cultural heritage exemplary punishments should be awarded to the smugglers who are depriving the nation of its valuable assets. — Exlusive Customs Today photo
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purchasing apartments in dubai
fBr seeks to collect buyers’ information islamabad
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ederal Board of Revenue (FBR) has made an attempt to collect particulars of Pakistanis, who have shown interest in buying properties and luxurious apartments in Dubai, as recently seminars were organised in Karachi and Lahore by international marketing companies to lure the local investors. It has been reliably learnt that foreign property companies from Dubai held seminars in Karachi and Lahore recently to attract locals for booking of luxury apartments in Dubai. The prices of such luxury apartments start from Rs 15 million and they go up manifold for apartments in high-rise towers and apartments built by branded ventures of global re-
pute. Tax authorities are concerned that this is a move for Klight of capital from Pakistan in the form of investment in proprieties in Dubai. FBR took notice of the advertisements and decided to send their team of tax ofKicials at these seminars at Karachi and Lahore to collect information about the visitors who wanted to purchase apartments in Dubai. Sources said that FBR has not given any written instructions to the Kield formations in Karachi and Lahore for collection of data at these seminars. However, it was decided at the Board’s level to check particulars of keen buyers and verbal instructions were communicated to the relevant Kield formations in Karachi and Lahore to visit the seminars organised in hotels. Certain tax ofKicers and ofKicials visited these seminars in the form of a team at the designated hotels located in Karachi and Lahore. Primarily, tax ofKicers watched the kind of people who have shown interest in
the seminars. They observed the visitors and also tried to collect data about such visitors, who were interested in purchasing property in Dubai. It was a sort of advertisement and awareness campaign rather booking of apartments or advance payments. The visitors collected brochures and inquired about different kinds of real estate investments in Dubai. According to sources, it was found that the seminars were mainly a kind of publicity campaign, but no purchase/booking of apartments took place. Reportedly, the tax ofKicials concerned informed the Board that no bookings or advance payments were made in the seminars as communicated by the organisers to these ofKicers. The tax ofKicials also approached the organisers to collect information with the argument that the tax department has legal authority to collect information about the interested persons who have given their phone numbers and addresses to the investors.
bid to smuggle 2kg heroin to UK foiled laHORE
cuSToMS Today reporT www.customstoday.com
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odel Customs Collectorate’s Investigation and Prosecution (I&P) unit has foiled a bid to smuggle heroin worth Rs0.7 million through courier parcel to UK and registered an FIR against the person responsible. According to details, Syed Zafar Hadi, Manager Operation, Sky Net Worldwide Express Airport Lahore unit informed customs authorities that he has received a UK-bound suspicious carton which contains eight utensils boxes and seven ladies suits. Soon after receiving the information, I&P Customs Inspector Muhammad Amin Sukhra, along with other
— Exlusive Customs Today photos
officials, reached Areo Fright unit Sky Net office and found a parcel booked by a resident of Kashmir (Islamabad), Imran Khan, son of Raja Mehboob Khan, for UK to Perveen Begum. The customs officials said that when they unwrapped the carton and thoroughly examined its contents, they found a 2kg of suspicious material at the bottom of each utensil box
which was later confirmed as heroin after a laboratory test. The officials said that the carton was opened in the presence of manager of courier service and other customs officials and was confiscated. The customs department has registered an FIR against the accused for illegally smuggling heroin from Lahore to the UK.
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sPECial REPORT
OCTObER 15 - OCTObER 28, 2013
The governMenT Should enhance direcT TaxeS BecauSe ThiS will reduce The Burden on The poor
islamabad
faiZa iSrar
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enator Engineer Humayun Khan mandokhel, member senate standing Committee on Finance & Revenue, has said that the reversing of the duty on unregistered persons from 19 per cent to 18 per cent will be helpful in collecting more revenue but the step can harm the drive for documenting the unregistered persons. On the other hand, the raise in customs duty and sales tax will result in inflation, ultimately shifting the burden to consumers. in an exclusive interview with Customs Today, mandokhel said that here tax officers in the field have to go door-to-door and shop-to-shop for registration purposes and collection of NTNs, while in the rest of world it is obligatory to get registered before opening a shop or any business. all over the world there is a proper registration system which unfortunately we are lacking. To increase the tax revenue, the first and foremost step is to prevent misuse of tax rebate
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facility by the top businessmen in Pakistan, mandokhel added. He said that FbR has decided to track the rich tax evaders by checking their lifestyle and it can easily be done by collecting information about their children’s education, bank records, mobile usage, property, etc. Talking about collection of revenue and data by FbR, he said that previously the bad reputation of FbR was a big problem in the way of widening the tax net but things are getting better gradually. He said FbR has introduced a system under which notices carrying a bar code are sent from the main office which helps in accurate tracking and eliminating malpractices. He said that doctors and lawyers should also be brought under tax net because they earn a lot. He said that instead of increasing indirect taxes, the government should enhance direct taxes because this measure will reduce the burden on the poor. mandokhel said that the introduction of amnesty scheme for 50,000 vehicles caused a reduction in collection of customs duty this year. another reason can be an increase in the import of major items through unfair channels. also, due to price hike and lower purchasing power, fewer
things are being imported and less duty collected. Talking about energy crisis, he said that it is unfair to compare the four months of the present government with the past 5 years during which no work was done to address the problems of the people. bhasha and munda dams should have been constructed by the previous governments but the current government is taking this matter seriously. Kalabagh dam issue has been politicized which has delayed the project for years. He said that it’s the time to build the dam and for this purpose the government should get complete the necessary technical details. Construction of Kalabagh dam can easily store rain water, along with fulfilling our energy needs, he said. “We have sufficient gas reserves in our country, so there is no need to import gas from iran,” he said this while replying to a question about early completion of Pak-iran gas pipeline. answering another question about imF loan, he said that although it is not a good thing but owing to huge financial problems, the loan had to be contracted to correct the balance of payments.
TO iNCREasE THE Tax REvENUE, THE FiRsT aNd FOREmOsT sTEP is TO PREvENT misUsE OF Tax REbaTE FaCiliTY bY THE bUsiNEssmEN: HUmaYUN KHaN maNdOKHEl
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sPECial REPORT 07
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OCTObER 15 - OCTObER 28, 2013
Founder & Chairman Zulfiqar ali Editor nasim ahmed 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
challenge for fBr
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ccording to the latest report, FbR has collected Rs 488 billion from July 1 to October 3, 2013 as compared to Rs 421 billion in the same period of the last financial year, registering a growth of over 17 percent. it is significant that as against imF’s estimate of Rs 436 billion worth of revenue collection for the first quarter of the current fiscal year, FbR has raked in Rs 482 billion, Rs 46 billion above the assessment of the Fund’s staff. income tax, sales tax and federal excise duty all have registered healthy growth. iT collection has gone up to Rs 173 billion from Rs. 152 billion in the corresponding period last year. similarly sales Tax has risen from Rs. 213 billion to Rs 249 billion and FEd from Rs 23 billion to Rs 32 billion. by comparison customs duty, totaling Rs. 55 billion declined by Rs 2 billion. However, in terms of its own internal target, FbR is still facing a revenue shortfall of Rs 10 billion for the first quarter as tax authorities had envisaged a target of Rs 492 billion for this period. FbR’s gross collection for the period under review stood at Rs 509 billion compared to a collection of Rs 446 billion last year. This is encouraging progress but not good enough to gradually proceed towards the annual tax collection target of Rs 2475 billion for 2013-14. in other words, FbR will have to manage an average monthly collection of over Rs. 600 billion to reach this figure. at the beginning of the fiscal year, the tax collection rate is generally slow but it accelerates towards the closing months. This means that the collection figures will start growing as the fiscal year wears on. but FbR will have to meticulously plan for this. it will not happen automatically. since sales tax and customs duty are inextricably bound up with manufacturing and industrial activities, the scope for collection under these heads will depend upon the growth of the economy which has yet to pick up momentum. by contrast there is unlimited potential to increase the revenue from income tax. To reach its target, FbR will have to devise special measures to catch the rich and wealthy tax evaders who are not in thousands but millions.
Trade, not aid laHORE
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he development experience of the Third World in the last 60 years has shown that it is trade, and not aid, which ensures sustainable socio-economic growth. This was the theme that PM Nawaz Sharif took up while addressing the high-level Political Forum on Sustainable Development at the UN. He emphasized that the development agenda should not be based on aid alone, as it creates dependency and stunts the growth process. Instead, Nawaz Sharif said, he was in favour of trade, market access, economic partnerships and
transfer of technology which are more effective tools to quicken the pace of progress in poor countries. Trade also imparts a strong stimulus to agriculture, industry and services. Due to the short-sighted policies of successive governments, Pakistan from its early years got trapped in the vicious cycle of aid and loans. Over time the composition of foreign aid has changed from grants to hard loans. It has also been found that aid money is misused by the bureaucracy and spent on non-viable projects. A major share of foreign assistance goes to repayment of loans and debt servicing and very little is spent on education, infrastructure, healthcare, population welfare and other so-
cial development projects. By contrast, trade makes a positive impact on poverty reduction. Free trade agreements among regional economies like the European Union bloc and ASEAN have resulted in an increase in people’s welfare and decrease in poverty. During his current visit to the United Nations, Prime Minister met with the president of European Council to plead for greater access to the EU market. European Union is Pakistan's single largest trading partner, and Pakistan's inclusion in the GSP plus scheme in 2014 would further deepen trade and investment linkages between the two. A few days ago, Pakistan State Minister for Commerce urged the American ambassador to convene
the Trade and Investment Framework Agreement Council meeting at the earliest to resolve bilateral trade and investment issues and facilitate the export of Pakistani products to the US market. The French envoy to Pakistan was also recently approached to allow Pakistani goods broader market access on preferential treatment to enhance bilateral trade. Pakistan needs to pursue this policy more aggressively with all its trade partners, especially those with whom we have a negative balance of trade. By stimulating manufacturing and expanding exports we can gradually reduce our dependence on foreign Kinancial crutches. Trade, not aid, is the way to economic salvation.
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PiCTORial
OCTObER 15 - OCTObER 28, 2013
lahore tops the list with highest number of tax dodgers
ISLAMABAD: The notices sent by the Federal Bureau of Revenue (FBR) show that Lahore city has a large number of tax dodgers. About 30,333 individuals have been served notices so far. Most of these people are well-off and have luxurious houses and brand new vehicles but don’t pay taxes. A tax official disclosed that out of total 30,333 notices, 7,065 were sent to Lahoriites in July, August and September this year. FBR sent these notices with the help of NADRA, but it is still uncertain that how FBR would collect this revenue.
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FbR Chairman Tariq bajwa visits lTU, Karachi
ex-fBr chairman remembered islamabad: The Rawalpindi islamabad Customs agents association has held a condolence reference on the sad demise of ex-FbR chairman Riaz Hussain Naqvi. Remembering late Riaz Hussain Naqvi, association’s President Rana aqeel said that he was an honest officer who tried his best to uplift the image of FbR. “We had the honour to work with a person like him. may allah almighty rest his soul in peace and grant fortitude to the bereaved family to bear this irreparable loss,” he added.
karachi: Chairman, Federal board of Revenue, Tariq bajwa, along with shahid Hussain asad, member (iR Policy) and muhammad ashraf Khan, member (iR Operation) visited large Taxpayers Unit, Karachi. The meeting was also attended by the Chief Commissioners inland Revenue lTU, RRTO‐i and RTO‐iii. a meeting was also held between Chairman, FbR and various trade bodies like FPCCi, KCCi, PTa and Pakistan leather Garments manufacturers & Exporters association. The prominent members of the trade bodies like s. m. muneer, mian Zahid Hussain, mian muhammadd ahmed, mr. mazhar Nasir, mr. shaukaat ahmed, shakil dogra from FPPCCi, Zakaria Usmani, Nasir mahmood, muhammad idrees, muzafar a malik, sirraj Qasim Teli, Zubair motiwala from KCCi, Habib ur Rehman, s . m. Naseem, Nasim shafi from PTa and Fawad ijaz Khan, asif Rahim, s. shujaat ali, arif Qureshi from PlGmEa attended the meeting.
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lahore: Chairman mCb bank and Nishat Group mian muhammad mansha addressed a seminar at investment media advocacy Centre (maC). syed babar ali, secretary board of investment imran Cheema, industrialist iftikhar ali malik, former Chairman FbR ansar Javeed, altaf saleem and former Finance minister salman shah also addressed the seminar. karachi: Group photo of newlyelected President of Korangi association of Trade & industry syed Farrukh mazhar with Patron-in-Chief s.m. muneer, mian Zahid Hussain, Zubair Chhaya, senior vice President Hasham a. Razzak and vice President Faraz ur Rehman.
lahore: Chief Commissioner Regional Tax Office-ii lahore muhammad irshad talking to a delegation of businessmen led by Chairman PiaF Tahir malik and former lCCi President irfan Qaiser at RTO. Others include muhammad Tariq and officials of RTO.
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10 NaTiONal
OCTObER 15 - OCTObER 28, 2013
Bajwa wants transfer of pral officers from fBr hQs
ISLAMABAD: FBR Chairman Tariq Bajwa has directed the PRAL officials working at FBR Headquarters to go back to their head office. The sources said Bajwa issued this directive in Board-in-Council meeting. Although the process of transfer of some PRAL officers has started, there are some procedural hurdles in the way because of which the directive has not yet been fully implemented.
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old imports during the first two months of current fiscal year have surged by 621 per cent as compared to the same period last year. according to data released by Pakistan bureau of statistics (Pbs), during the period under review, 3,265 kilogram of yellow metal worth Us$ 136.618 million was imported as compared to the import of 347kg valuing $18.78 million during July-august 201213. The overall imports of metal group registered an increase of 15.99 per cent during the first two months of the year 2013-14 against the same period of last year. The metal imports into the country during the period under review were recorded at $526.157 million against imports of $453.604 million during same period of last fiscal year. imports of iron and steel scrap registered a growth of 11.63 per cent during July-august (201314) as compared to the imports during July-august (2012-13). iron and steel scrap imports into the country were recorded at $133.381 million during the first two months of current fiscal year against the imports of $119.486 million during the corresponding period of last year. imports of iron and steel, however decreased by 23.36 per cent by going down from $200.463 million during Julyaugust (2012-13) to $153.638 million this year.
wriTe To uS aBouT your grievanceS: Through cuSToMS Today platform help deSk, now you have a 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
dialogue best way to resolve issues with customs authorities: KCaa President
KCaa to take up all issues with Customs high-ups: iftikhar KaRaCHi
Sohail raB khan www.customstoday.com
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ewly-elected President Karachi Customs Agents Association (KCAA) Iftikhar Ahmed Shaikh has said that he believes dialogue is the best way to resolve issues with customs authorities and the association is willing to fully cooperate with the Customs Department in this regard. In his first and exclusive interview with Customs Today after his election as KCAA President, Shaikh said that the association will raise the issues pertaining to WeBOC, duty payments, terminals operators and others with the officials concerned of Customs Department soon. To take up these issues with Customs Department, KCAA is going to constitute a committee soon. “We (customs agents) never ever caused revenue loss to the national exchequer and the newly-elected members of KCAA managing committee are determined to resolve the issues with customs officials amicably”, he added. Answering a question, Shaikh said that the general body meeting
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gold imports up by 621pc
of the association will be held soon to induct corporate members in KCAA managing committee, so that KCAA can work more effectively for the betterment of its members. “Managing committee has its legal right to bring constitutional amendments and expand the membership through its by-laws”, he added. Replying to a question, President KCAA said that the association will strictly follow the rules and regulations during his tenure
The association will raise the issues pertaining to weBoc, duty payments, terminals operators and others with the officials concerned of customs department soon and all customs agents will be treated equally. Their positive suggestions would be welcomed and the association will implement every positive proposal. He further said that the association will also give useful suggestions to the Customs Department to improve its working and to provide more facilities to customs agents. President KCAA said that the association will also raise its voice
to get more facilities for taxpayers. Replying to another question, President KCAA Iftikhar Shaikh said that he was quite satisfied with the performance of the pre-
vious body of KCAA. “I will take the positive work of previous KCAA body ahead and produce the best results in the larger interest of customs agents”, President KCAA asserted.
poor facilities at picT To Honourable Kamram Michael Federal Minister for Port and Shipping Government of Pakistan Islamabad Sir,
Exporters are facing immense difKiculties and problems at the hands of terminal operators at different terminals. This is specially so at the Pakistan International Container Terminal (PICT) where the terminal staff with its slackness cause the exporters tremendous mental agony. The terminal operators have enough time to ofKload the containers, but instead of timely ofKloading, they start their activities very late after losing much valuable time. Due to this prac-
tice, the exporters suffer loss of millions of rupees. Customs ofKicials also face difKiculties in examination and assessment of the goods, as they do not have sufKicient time to properly do their work. “The charges of terminal operators are very high, but their service standard is poor. On behalf of the exporters I humbly request you to kindly look into the matter and issue directives to all terminal operators to enhance their performance. The improved performance of the terminal operators will deKinitely be of great beneKit to the national exchequer. Yours Sincerely, Yahya Muhammad, M/s Ocean Packers and Movers Karachi
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now get dubai customs on your smartphones
DUBAI: With the services sector being a key competitive advantage that draws investors and traders to Dubai, Dubai Customs has upgraded into a “smart” department to hone the edge. Now Dubai Customs services are available through mobile phones 24/7, a leap from its earlier e-services. This is part of the initiatives to support the UAE’s bid to host Expo 2020. Ahmed Butti Ahmed, Executive Chairman of Ports, Customs and Free Zone Corporation and Director General of Dubai Customs, made the announcement at a press conference.
CaRTOONs sPECial
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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