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Vol 1 issue no. 33

karachi, Tue oct 01 - mon oct 07, 2013

Weekly

Dastagir calls Expo Pakistan

Economic growth and increasing foreign trade are two cornerstones of the present government says commerce Minister Khurram Dastagir | sEE PAgE 10 | Workshoponombudsmanship

Karachi

sohAil rAb khAn www.customstoday.com

in order to provide speedy justice to people, Ombudsman’s institution needs to be strengthened, says FTO abdul rauf chaudhry | sEE PAgE 9 | reducing withholding rates

The measure would have no revenue impact and it was simply removal of a tax anomaly to facilitate the business community, says FBr chairmanTariq Bajwa | sEE PAgE 2 | removing WeboC anomalies

FBr is working to improve modules ofWeBOc which would be replicated at all dry ports and sea ports, says Member customs Nisar Khan | sEE PAgE 3 |

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n keeping with the vision of Prime Minister Nawaz Sharif to open up new trade routes to speed up the pace of progress and prosperity in the region, Pakistan Customs and the Directorate of Transit Trade are working together planning the construction of transit trade corridors leading to Kashgar, Tehran, Istanbul and other Central Asian countries.

This was stated by Director General (DG) Transit Trade Khawar Farid Maneka during an exclusive interview with Customs Today at the Directorate of the Transit Trade OfNice in Customs House, Karachi.

“Our topmost priority is to ensure safe cross-border supply of goods and reconciliation of the containers through a transparent, swift and secure process. Pakistan Customs has achieved 99.8 percent success rate in ensuring cross- border movement of containers since May, 2013”, Maneka added. But our aim is to ensure 100 percent scanning of all containers, including NATO, ISAF, military and others, at every check-post, he said “Pakistan Customs and Directorate of Transit Trade are determined to create facilities in order to attract other countries to use Pakistan corridors for getting access to Central Asia”, Maneka added.

Responding to a query, the DG said that Directorate of Transit Trade has initiated the process of proper tracking and monitoring of the containers on all transit trade routes. He disclosed that a Central Control Room (CCR) has been set up at Customs House, Karachi to monitor the movement of containers. Regional Control Rooms have also been established for the same purpose.

Maneka further informed that Directorate of Transit Trade is going to propose the penal clause for improvement of tracking system installed in the containers.

Replying to a question, Maneka said that Mobile Enforcement Units (MEUs) have been set up at all regional Collectorates from

Karachi to Torkhum. “These MEUs will react promptly in case of any theft attempt and looting of containers”, he asserted.

Elaborating, the DG Transit Trade said that the enforcement units will prove effective only if ofNicials in the Central Control Room work efNiciently and keep an eye on every container till their crossing into Afghanistan. He further said the Central Control Room and regional Mobile Enforcement Units are interlinked in order to improve the checking of containers.

“The ofNicials concerned in Model Customs Collectorate (MCC) Preventive should improve their performance, as it is essential for better surveillance of containers”, Maneka maintained. Referring to the missing containers report presented by former Member Customs Ramzan Bhatti, the DG Transit Trade said that the report presented before the Chief Justice of Pakistan was ‘satisfactory’ and covered all aspects of the issue.

Maneka clariNied that the Afghan Transit Trade (ATT) scam surfaced befor e his appointment as DG Transit Trade.

Pakistan Customs and Directorate of Transit Trade are determined to create facilities in order to attract other countries to use Pakistan corridors for getting access to Central Asia

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02 NaTiONaL

OcTOBEr 01 - OcTOBEr 07, 2013

Dubai Customs foils smuggling of 1,960 white weapons

DUBAI: Dubai Customs seized 1,960 white weapons in Jebel Ali & TECOM Customs Centre during an attempt to smuggle two shipments of these weapons into the UAE. The inspectors of Jebel Ali Customs suspected the two shipments, which were discovered to contain 1520 knives, 30 swords, 110 pistol holders, 200 range boxes, and 100 gun cleaner tools. Dubai Customs continues its efforts to thwart any attempt to smuggle white weapons through regular seizures, as part of its active contribution to the measures taken by the state.

Govtreducessalestax withholdingrates:Dar

Pakistan beats india in direct tax collection iSLaMaBaD

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comparison of direct tax collection of Pakistan and india shows that the FBr observed a growth of 44.1pc in July to September 2013 as compared to indian tax authorities’ performance that witnessed 12.5 per cent increase in direct taxes collection during the same period.

The experts explained that in Pakistan, rs101.840 billion were collected under the head of direct taxes during the corresponding period against rs70.674 billion in the same period last fiscal, reflecting an increase of 44.1 per cent.

While, net direct tax collection of india for the current fiscal year, till September 17, remained rs238,325 crore against rs2,11,641 crore in the same period of last year with an increase of 12.5 per cent.The corporate tax collection stood rs146,610 crore against rs135,791 crore collected in 2012-13, showing a growth of 7.97 per cent. according to the experts, the comparison of Pakistan and india shows that the FBr has witnessed 31.6 per cent higher growth in net direct taxes collection as compared to the indian tax department during the period under review.The experts, referring to the recently issued 87th report on "Tax administration's relating to the Ministry of Finance india," said that the report talks about new reform measures to improve direct taxes collection in india.

— Exlusive Customs Today photo

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inance Minister Ishaq Dar, chairing a high-level meeting to review various concerns expressed by the business community regarding procedural and tax anomalies, announced a reduction in rates of sales tax withholding regime on purchases from unregistered persons and for wholesalers and dealers.

During the meeting which was attended by Secretary Finance Dr Waqar Masood, Federal Board of Revenue (FBR) Chairman Tariq Bajwa and senior ofNicials of Ministry of Finance, various issues and proposals relating to income tax and sales tax came under discussion.

Tariq Bajwa said that the policy decisions were taken to facilitate the business community with a Ninancial impact of less than 0.1 per cent of the

Rs2.475 trillion revenue target set for the current Niscal year. He said the accurate impact of revenue loss was yet to be Nirmed up.

An FBR ofNicial said the exchequer would suffer a loss of about Rs2 billion to 2.5 billion a year, but the move was clearly a setback to the government’s documentation drive.

While, FBR chairman said that major initiative to document big players - distributors and wholesalers - would remain protected, though retailers in a couple of instances now stood exempted from documentation.

About the exact cost of these incentives in terms of revenue efforts, FBR Chairman Tariq Bajwa said there would be a marginal cost involved, but it was not signiNicant. However, he did not disclose any Nigure of the cost involved for this tax incentive package given by the government to business tycoons.

The FBR chairman said the measure would have “some revenue impact, exact amount of which would be worked out”. He said given the cas-

cading nature of revenue collection, taxpayers were allowed refund adjustments but since the major objective was documentation and not revenue collection, it was creating difNiculties for the supply chain because of different prices of goods at retail stage, hence 1pc withholding sales tax had been allowed for an improved compliance. The government has also exempted items chargeable to sales tax on retail stage from sales tax withholding regime. Bajwa said the measure would have no revenue impact and it was simply removal of a tax anomaly to facilitate the business community.

The government waived the condition of providing CNIC, NTN and addresses of retailers under section 236H to be provided in the withholding statement under section 165 of the Income Tax Ordinance, 2001.

Tariq Bajwa said the waiver would

The measure would have no revenue impact and it was simply removal of a tax anomaly to facilitate the business community, says FBr chairman Tariq bajwa

have a minor revenue impact. He agreed that a section of businesses, particularly retailers, would get a relaxation from documentation but it needed to be appreciated that a middle step to document distributors and wholesalers would be achieved.

The Ninance minister decided the following: Rate of sales tax withholding on purchases from unregistered persons has been reduced from 17% to 1% which will not be adjustable.

Items added in the third schedule of the Sales Tax Act 1990 vide Finance Bill 2013 (except for fertilizer and cement) have been omitted from the third schedule and subjected to two per cent extra tax in lieu of sales tax at retail stage.

Items chargeable to sales tax on retail prices have been exempted from sales tax withholding regime.

Rate of withholding for wholesalers, dealers (including petroleum dealers) and distributors is reduced from the current level of one Nifth (i.e 3.4%) to one-tenth (i.e 1.7 %) of the applicable rate of sales tax.

Commercial importers who are subject to withholding on income tax have been excluded from sales tax withholding regime. Restriction imposed under (x) of SRO 1125(1)/2011 dated 2011 on refunds against local supplies has been done away with to allow refunds (after refund scrutiny) as admissible under the relevant law.

The rate of withholding tax on goods of transport vehicles under section 234 of the Income Tax Ordinance 2001 is reduced from Rs 5 per kg of the laden weight to Rs 3 per kg.

The condition of provision of Computerised National Identity Card Number, National Tax Number (NTN) and addresses of retailers under section 236H to be provided in the withholding statement under section 165 of the Income Tax Ordinance, 2001 is waived. Sales tax on fabrics has been reduced from 5% to 3%.

Govt taking steps to resolve business community issues: commerce Secy LahOrE

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ederal Secretary Commerce Qasim M. Niaz said that the present government is taking all possible measures to get hold of challenges being faced by the business community and the economy would soon be back on rails.

He was speaking at the Lahore Chamber of Commerce & Industry recently. LCCI President Farooq Iftikhar gave brief, true and factual view point on economic situation in the country. The LCCI Senior Vice President Irfan Iqbal Sheikh, Vice President Mian Abuzar Shad, former Presidents Iftikhar Ali Malik, Mian Misbah-ur-Rehman, Mian Muzaffar Ali, former Senior Vice President Sohail Lashari and former Vice Presi-

dent Aftab Ahmad Vohra also spoke on the occasion.

The Federal Secretary said that the government strongly believes in consultation with private sector so this concept is being implemented in letter and spirit. About 3-year strategic policy frame work, the Federal Secretary said that a detailed implementation plan is being evolved to make it result-oriented. He said that shortterm and medium-term plans are being evolved to overcome economic issues. He admitted that the working of Trade Development Authority of Pakistan (TDAP) is beyond satisfaction and government is giving it a fresh look at it to achieve export target.

Federal Secretary said that smuggling is a great challenge and it is being tackled with same amount of vigor and force.

To a question about GSP Plus Status to Pakistan, the Federal Sec-

lCCi President farooq iftikhar presenting shield to Commerce secretary Qasim m. niaz.

retary expressed optimism and said that the things are moving in right direction.

Speaking on the occasion, the LCCI President Farooq Iftikhar said that Pakistan should actively enter into Free Trade Agreements and Preferential Trade Agreements with countries where it has a clear and mutual comparative competitive advantage.

He proposed the creation of country-level and regional FTA/PTA Advisory Councils involving the representatives of private sector and ofNicials of the Ministry of Commerce for exploring all avenues to beneNit from such agreements.

The LCCI President said that currently smuggling is at its peak. Markets are Nlooded with smuggled items covering all sectors and products causing loss of billion of rupees to the national exchequer.

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03

mCC lahore seizes illegal goods worth rs9.7m

LAHORE: Anti-smuggling unit of Model Customs Collectorate (MCC) Lahore has confiscated illegal goods worth Rs9.7 million. As per details, anti smuggling unit Inspector Sikandar Bajwa, acting on a tip-off, raided on two trucks loaded with 50 tons of steel sheet coils being transported from Misri Shah to a local trader’s godwon. The inspector confiscated the illegal coil sheets worth Rs7.5 million and registered a case against the responsible.

FBrdecidesto replicateWeboCwithimprovedmodules For improving collection at import stage in the shape of customs duty, sales tax and withholding tax, FBr wants to put in place a unified evaluation system to plug leakages as there were complaints that different duties were charged at different destinations iSLaMaBaD

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n order to introduce a uniform evaluation system for clearance of goods at all entry and exit points of the country, Federal Board of Revenue (FBR) has decided to replicate the online computerized system known as WebBased One Customs (WeBOC) with improved modules.

This system will be in place within the next few months as work is underway on an urgent basis in this regard, said a senior ofNicial of FBR. Tax authorities are facing the gigantic task of meeting the highly challenging revenue target of Rs2475 billion in the current Niscal year. The incumbent administration believes that without improving administration and simplifying procedures the desired tax target cannot be achieved.

“For improving collection at import stage in the shape of customs duty, sales tax and withholding tax, FBR wants to put in place a uniNied evaluation system to plug leakages as there were complaints that different duties were charged at different destinations,” a senior ofNicial of FBR said.

When contacted, Member Customs Nisar Muhammad Khan said that FBR was working to improve modules of WeBOC which would be

replicated at all points, including dry ports and sea ports, to ensure a uniNied system for clearance of goods. “We will replicate this system at all points within the next three months,” he added.

Member Customs said that FBR had set up this system but there were certain stumbling blocks to working the system at all points. Now, FBR is improving modules of WeBOC which will be put up at all desired places within the next few months, he concluded. In this context, the provisions of Chapter XVI-A of Customs Act, 1969 will be applied to all the notified customs stations throughout Pakistan.

The WeBOC system, developed

by FBR’s subsidiary Pakistan Revenue Authority Limited (PRAL) is aimed at clearing the goods using online facilities by minimizing human interaction.

Earlier, FBR had used Pakistan Automated Computerized Customs System (PaCCS) which led to a conNlict with the originator of the company named Agility. After this controversy, FBR took the decision to develop its own system called WeBOC. In September 2012, FBR had made it mandatory for all export goods declarations at Karachi International Terminal (KICT) and Pakistan International Terminal (PICT) to be processed through WeBOC. FBR, the sources said, is all set to conduct audit of WeBOC in the near

fbr is working to improve modules of WeBOc which would be replicated at all points, including dry ports and sea ports, to ensure a unified system for clearance of goods, says Member customs nisar khan

future in order to examine its strengths and weaknesses.

It is relevant to mention here that all systems developed by PRAL have failed to deliver the desired results in most of the cases. FBR, the sources said, is going to hire a Nirm for conducting an audit of WeBOC system and its effectiveness.

FBR has also organized workshops to spread information about the usage of the paperless system by the clients keeping in view the vertical and horizontal rollout of the indigenously developed Customs Computerized Clearance System WeBOC. During these workshops, tutorials not only covered modules for bonded carriers and warehousing where external users of the system were invited for training, but they also included programmes for the rollout of the system to other Collectorates, where the Computerized System was not yet operational.

Steps were also taken to explain the role of DCs (MIS) in the rollout of the system at those Collectorates where this paperless system is yet to be made operational. In such a scenario, the Deputy Collectors (MIS) concerned should send the hard copies and other requirements of the Collectorates on urgent basis to the Project Team of WeBOC as the Computerized System will soon be applied in the remaining Collectorates of the country.

Customs to fix WeboC anomalies Karachi

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akistan customs is endeavoring to bring some positive changes in Web Based One customs (WeBOc).

Sources in customs house, Karachi told customs Today that a meeting of the customs officials including collector Mcc-West, collector Mcc-East, collector Mcc-Export, collector Mcc-Preventive and Project Director (PD) WeBOc was held recently in which it was decided that some amendments will be made in WeBOc system in order to provide more facilities to importers and customs agents. it is pertinent to mention here that the Pakistan customs, recently constituted a 15-member committee headed by PD WeBOc Syed Tanveer and members of trade bodies including Kcci, FPcci, Karachi customs agents association and others with a view to improving WeBOc system. a meeting of the said committee was held a couple of months ago in which the members of trade bodies had forwarded their recommendations and suggestions to the officials of Pakistan customs. customs agents observed a countrywide strike on September 10 for fulfillment of their demands, including improvement in WeBOc system.

The sources further informed that the customs officials will take the office-bearers of Kcaa and aPcaa into confidence regarding the decision made by the customs officials for the up-gradation of WeBOc System.

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OcTOBEr 01 - OcTOBEr 07, 2013

simplification of tax collection process underway

LAHORE: Simplification of tax collection system is afoot in Punjab, said Provincial Minister for Finance, Excise & Taxation Mian Mujtaba Shujaur Rehman. He said the government would take solid and practicable steps to facilitate taxpayers and minimize procedural formalities and practical difficulties. Property tax, motor vehicle tax and tax on services are major sources of provincial income, he said, adding, latest technology was being introduced in the department to collect these taxes.

fbr plans income tax return filers to be increased by 20pc iSLaMaBaD

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ith envisaged target to increase number of return Nilers by 20 percent for this ongoing Ninancial year, FBR has kick-started countrywide campaign in Large Taxpayer Units (LTUs) and Regional Taxpayers OfNices (RTOs) for educating the taxpayers to broaden its narrowed tax-base.

“Yes, we will make efforts to increase number of return Nilers by at least 20 percent during the current Niscal year,” a senior FBR ofNicial said and added that the tax machinery made it mandatory for all return Nilers to attach wealth statement along with Niled returns. In the wake of making wealth statement mandatory and other documents, FBR extended the date for Niling returns up to October 31, 2013.

In last Ninancial year, FBR had received income tax returns of around 7, 30,000 including individuals and corporate sectors. The corporate sector returns stand at 23,000 out of total received returns.

“We have kick-started an exercise of sending tax notices to 10,000 non-Nilers every month, asking them to come forward and discharge their national duty of paying due taxes,” a senior ofNicial of FBR conNided. So far FBR has sent notices to about 25,000 potential non-Nilers in

Nirst three months of the current Niscal year.

When contacted, FBR’s Member Inland Revenue (IR) Policy Shahid Hussain Asad said FBR extended the deadline for Niling income tax returns up to October 31, 2013 and now taxpayers would have sufNicient time to collect relevant details for Niling their returns within the stipulated timeframe. According to IMF’s report on Pakistan, these low numbers reNlect inability of previous reform efforts made by FBR to deliver sustained results.

The authorities need to develop and implement a strategy to strengthen tax administration, with the technical assistance of the Fund and the World Bank. While key elements of the strategy will need to be deNined, it should include signiNicantly stepping-up FBR’s enforcement activities and improving its legal authority. The IMF states that the anti-money laundering framework will need to be fully applied in this effort. Fiscal consolidation will have to rely heavily on tax policy changes to broadening the tax base.

The implementation of a full Value Added Tax (VAT) remains the Nirst-best option to raise tax revenue. The administrative authority to grant tax exemptions via SROs should be eliminated to prevent further degradation of the tax net. Income tax should integrate income from all sources, concessions and exceptions should be eliminated, withholding should be adjustable, with the minimum tax on turnover remaining as a control for deduction.

Luxury vehicles data to identify taxpayers Karachi

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o collect maximum income tax returns, the FBR has obtained data of around half million luxurious motor vehicles, official sources said.

The Federal Board of Revenue (FBR) is categorising the data of about 450,000 vehicles - registered with the Karachi Motor Vehicle Registration Authority during the last three years - by capacitywise and will compare with the returns filed by October 31. The sources said if the detected people fail to comply with the provision, they would be sent notices.

The data also include all the vehicles registered under the Amnesty Scheme launched by the revenue body, he added.

A Customs official said the most of the data was collected of the vehicles having engine capacity above 1,000CC. He said that Pakistan Customs has data of such vehicles and the Board can use it for identification of potential taxpayers.

It is pertinent to mention here that through the Finance Act 2009, a clause was inserted to Section 114 of the Income Tax Ordinance 2001 under which it was made mandatory to file the income tax returns for people having ownership of vehicles with the engine capacity above 1,000CC.

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OcTOBEr 01 - OcTOBEr 07, 2013

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Quick shipping lines vital to boost fruit exports

LAHORE: Pakistan possesses key strategic location which allows it to increase exports to different countries through strong communication, logistic channels and shipping lines. Vice President Asia Pacific Region Maersk Line Thue Barfod said that Maersk is focusing on emerging export sectors including fruits to provide best shipping services to traders. Containers and storage tanks have been designed at high standards for temperature requirement, he added.

FBr Year Book 2012-13 in review

massive shortfall in revenue collection

iSLaMaBaD

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akistan’s tax-to-GDP ratio had dropped miserably to 8.5 percent during last Ninancial year 2012-13 from 9.1 percent the preceding year 2011-12 mainly due to the dismal performance of tax authorities which missed the annual revenue collection target by Rs 442 billion.

According to ‘Year Book 2012-13’, Federal Board of Revenue collected Rs. 1939 billion during previous Niscal year as against the original target of Rs 2381 billion leaving shortfall at Rs 442 billion. The report also said that FBR failed to achieve the revised revenue collection target of Rs 2007 billion.

FBR during the last two months conducted an in-house exercise, analysed data for 2012-13 and Ninalised the said report. FBR explained in detail all factors responsible for revenue shortfall during 2012-13.

FBR in its report stated that revenue collection target set for previous Niscal year 2012-13 was gigantic and its achievement was very difNicult amid severe energy crisis and law and order situation in the country. The target was linked with expected growth in GDP, the rate of inNlation, tax buoyancy and other key economic indicators such as growth in the Large Scale Manufacturing sector and imports.

However, the tax department miserably failed to achieve the target.

The original target of Rs.2381 billion was however downward revised to Rs. 2007 billion. But FBR could collect only Rs. 1,939.4 billion.

FBR put blame on external as well as internal factors for missing the annual target. The assumption for setting target for 2012-13 was too ambitious. It was estimated at the time of Nixation of target for FY: 2012-13 that the Nominal GDP growth will be 16pc during the year i.e., real GDP was estimated to grow by 4pc and inNlation by 12pc. Similarly, total as well as dutiable imports were estimated to grow by 14.5pc and Large Scale Manufacturing (LSM) by 17.2pc in nominal terms. On the contrary,

the actual macroeconomic indicators remained below the expected outcome during 2012-13. For instance, real GDP growth was 3.6pc and inNlation was 7.8pc.

As a result the nominal GDP growth was 11.4pc during 2012-13.

Similarly, projection for total import and dutiable imports was 14.5pc, but imports grew by only 8.4pc whereas dutiable imports grew only by 3.3pc.

Similarly, the tax department noted that the target for 2012-13 was Nixed on the basis of Rs. 1,952 billion to be collected by end of June 2012-13 but actually the collection for the year 2012-13 ended up at Rs. 1,883 billion. Thus, the base was eroded by Rs 69 billion right from the beginning of FY: 2012-13.

According to the report, there were a number of other internal factors which further contributed in the

shortfall. FBR had to bear deNicit of Rs 34 billion due to shifting of sales tax on services from FBR to PRA (Provincial Revenue Authority), which was

integral part of FBR target of Rs. 2381 billion. Reduction in rate of sales tax from Rs 7 to Rs 4 per unit of electricity in cases of Steel Melters and Re-

CusToms DuTY CollECTion

rolling Units resulted in the decline of collection of Sales Tax. Suspension of section 153 A, introduced through Finance Act 2012 which was a major documentation measure having revenue impact of approximately Rs.15 billion.

The break-up of Rs 1939.4 billion revealed that collection under direct taxes has been 739.7 billion, which is higher by 0.2pc as compared to the corresponding period of last year.

As far as customs duty is concerned, around Rs. 239 billion has been collected during the year 201213. The collection has recorded a growth of 10.2pc over the collection of Rs 216.9 billion in the corresponding period of last year. The report, however, stated that to gear up the resource mobilisation efforts a new team has been brought in FBR to work with zeal and determination.

— Exlusive Customs Today photos

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iSLaMaBaD

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ember Taxpayers Audit Haroon Muhammad Khan Tareen said that timely and accurate Niling of tax returns is a national obligation of every taxpayer. Taxpayers should understand the importance and utility of taxes. Reforms in FBR are essential to run all the departments working under it smoothly. For that purpose, coordination and linkages among departments have to be strengthened on an urgent basis.

In an exclusive interview with Customs Today, Mr. Haroon said that balloting was conducted transparently as there was no interference of any department like PRAL which made it fair and impartial. For the purpose of auditing, we have put in place a modern Tax Payer Audit Management System (TAMS) to facilitate taxpayers and to enhance the audit transparency.

He stated that the notices for audit will be sent through this computerized system which will eliminate the meddling of Niled ofNicers. Due to this there remains no interaction between taxpayer and tax authority in auditing process and now powers are conferred to commissioners.

Mr Haroon further elaborated that notices will be issued to taxpayers through software and every notice will have a separate ID and bar code. This notiNication passes through three steps; Nirstly, the electronically sent notices are adjusted in the taxpayer folder, already made in the software; secondly, the other copy is sent through email and thirdly, SMS is generated.

The time of writing letters and correspondence will also be added in the system.

In an answer to a question, he said that Nield ofNicers face pressures from taxpayers to fabricate the auditing process but we are normally not informed about this because we only make policies over here while the actual implementation of process and conducting of auditing is entirely done by Nield ofNicers.

He said that this auditing process has just introduced in Pakistan but it is applied around the world including America. Once the system selects a taxpayer, they start his/her auditing for last 5 or 7 years.

While talking about addressing taxpayers’ grievances during auditing, Mr Tareen said that every taxpayer aggrieved of auditing has the right to appeal. He can approach Commissioner Appeals and Inland Revenue Appellate Tribunals consisting of 2 persons. A tribunal consists of one grade-21 ofNicer, from Law Ministry who has powers of a judge. And then the applicant can also move the Supreme Court and the

We have put in place a modern Tax Payer audit Management System to facilitate taxpayers and to enhance the audit transparency, says Member Taxpayers audit High Courts.

In an answer to a question, he said that trials regarding taxpayer problems are held on an urgent basis but still a number of problems delay the process due to working of tribunals and psychology of taxpayers. As a tribunal is composed of 2 members – the judge and the accountant, and for adjudication, presence of both is compulsory. If anyone is absent the proceeding will be postponed. Sometimes, Taxpayers’ lawyers try to take dates from the tribunal without prior knowledge of clients. Another culture developing rapidly is that the other party Niles writ petition through the High Court and the tax cases are given secondary importance there owing to more important cases like murder and dacoity, etc. He said, “We lack human resource and this creates difNiculties in the Nield especially in delivering the notices to taxpayers. We have inspectors for sending notices but it’s a lengthy process. We have to advertise through different means.” He stressed that transfers and postings of all ofNicers in FBR should be held on regular basis, otherwise the department could not get the full output from those ofNicers. Transfers and postings make the ofNicers more efNicient and vigilant.

He said that present FBR Chairman Tariq Bajwa is a candid and honest ofNicer who is working very sincerely to uplift the performance and enhance the image of FBR. All transfers and postings under the chairmanship of Tariq Bajwa are made on merit and competent and honest persons are posted on prominent posts.

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OcTOBEr 01 - OcTOBEr 07, 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

fbr: ACCEssTo bAnk ACCounTs iving FBr access to depositors’bank accounts has become a controversial issue. Ever since the Government empowered FBr to scrutinize the bank accounts of potential tax payers through an amendment in the incomeTax Ordinance 2001, a debate has been raging in the country about the merits and demerits of the decision. Businessmen and the banking industry have strongly opposed the move on the ground that allowing FBr sweeping powers to access the confidential account holders’ database will erode the depositors’trust and trigger a capital flight. FPcci, Kcci, KSE and other businessmen’s bodies have urged the government to withdraw the amendment because besides violating the principle of banking secrecy it will retard the process of documentation of the economy. it has also been argued that the new practice may seriously compromise the personal security of customers through leakage of such information to criminal syndicates.

The State Bank of Pakistan has also taken exception to the new powers given to FBr. in its Monetary Policy Statement, the central bank expressed apprehensions that granting such access to FBr could hit bank deposits by deterring savers to hold deposits with the banks. On the other hand, members of the Senate Standing committee on Finance and revenue have also disapproved the move and unanimously proposed that the government should review its decision. however, the government remains firm in its resolve despite the fact that the Sindh high court recently restricted FBr from taking coercive action against the NiB Bank in the case of disclosing information of account holders. Finance Minister ishaq Dar said that it was important for FBr to scrutinize selected bank accounts in order to detect revenue leakages.

Faced with opposition from various quarters, FBr has adopted a cautious approach in dealing with the issue. it has held out assurances that the new powers will be used most discreetly without causing any inconvenience to common account holders. FBr chairmanTariq Bajwa has clarified that FBr will go after only un-documented persons operating out of the tax net. FBr has been given the target of raising the tax revenue by 25 percent, but it cannot accomplish the herculean task without devising new ways. Giving FBr access to bank accounts is one such step which is essential to identify wealthy non-filers. confidence building measures need to be taken to address the concerns of the business community.

FBr does not need to be very intrusive as banks themselves have a system of in-house checks and balances to deal with the menace of money laundering and other malpractices.What FBr can do to reassure the business community is to lay down strict rules with a view to minimizing the possibility of misuse of powers by the Bureau staff. in this connection it will be a good idea to form a joint committee of high FBr officials and representatives of FPcci to oversee the monitoring of banking transactions on case-to-case basis.

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TiEs WiTh TurkEY

one nation, two states LahOrE

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mong the few all-weather friends that Pakistan has Turkey, along with China, tops the list. It is a relationship of deep mutual respect and trust that transcends the vagaries of transient political afNiliations and shifting economic interests. It was therefore logical that Prime Minister Nawaz Sharif chose to visit the brotherly country early on in his tenure.

The Pakistan Prime Minister could not have described bilateral relations more eloquently than when he said that Pakistan and Turkey are like “one nation, two states.” In saying this he referred to ties whose roots lie deep in history. Much before Pakistan was born as an independent state, the Muslims of South Asia resolutely stood by Turkey all through the turbulent years of the two world wars.

After independence Pakistan forged close ties with Turkey, with both countries cooperating fruitfully to put their bilateral relations on strong footing and sharing common views on regional and international issues.

In recent years Pakistan and Turkey

have shared the common struggle for bringing their democracies back on track.

Politically stable and economically strong, Turkey has in recent years emerged as a key regional player performing the role of an honest broker in reconciling differences and resolving conNlicts between neighbours.

Nawaz Sharif acknowledged this in the course of his visit, saying that Pakistan would seek the help and guidance of Turkey to better advance our own efforts to combat what has become a pervasive threat both to internal stability and external relations.

The Pakistan Prime Minister held in-depth discussions with his Turkish counterpart Erdogan following which the two countries signed a number of agreements and MOUs to increase cooperation in trade, energy, infrastructure development, security and other areas, as well as enhance efforts for peace in the region Both the premiers co-chaired the third High-Level Cooperation Council (HLCC) meeting, which they described as ‘very productive’. Later, addressing a joint press conference, the two premiers said ‘there was complete unanimity of views’ between Pakistan and Turkey on issues of bilateral and regional interest.

Politically stable and economically strong, Turkey has in recent years emerged as a key regional player performing the role of an honest broker in reconciling differences and resolving conflicts between neighbours

During his visit PM Nawaz Sharif Nawaz called upon the Turkish business community and entrepreneurs to invest in Pakistan, especially in sectors like energy, infrastructure, engineering and the agro-based industry.

Turkish companies have a history of successfully working in Pakistan.

Lahore’s Metro Bus System and a wind energy project in Sindh are two examples of this. Needless to say, there is tremendous potential to boost cooperation between the two countries in various sectors, including solar and wind energy, agriculture, transportation, low cost housing and education. No doubt, there is a huge reservoir of goodwill between the two countries, but we have still a long way to go to translate the excellent political relations into tangible economic ventures. In this connection, the low volume of bilateral trade needs special attention. To overcome the lack on this front, both sides need to put in place strong institutional mechanisms to provide a strong platform for implementing joint projects already agreed upon. Nawaz Sharif’s assurance that a special unit to monitor the progress of bilateral agreements would be set up in the PM secretariat augurs well for the future.

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sri lankan customs seizes gold from smugglers

COLOMBO: Sri Lankan customs seized two kilograms of gold from two men hidden inside their bodies in an attempt to smuggle it out of the country. Two Sri Lankans were caught just before they boarded a flight to the Indian city of Mumbai, customs spokesman Leslie Gamini said, adding that it was the biggest haul of gold they had found inside a person. The gold valued at nearly $100,000 was confiscated and the men were fined $384 each.

Need for further strengthening of FTO institution stressed iSLaMaBaD

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lAhorE: Lcci President Farooq iftikhar in a group photo with Lahore customs agents President agha iftikhar and Senior Vice President aPcaa Northern Zone chaudhry amjad during his visit to Mughalpura Dry Port.

— Exlusive Customs Today photos

Participants taking part in a two-day workshop organized by the forum of Pakistan ombudsman in collaboration with the international ombudsman institute, Vienna and the World bank.

lAhorE: Businessmen and key members of Lcci casting their votes during chamber’s annual election 2013-14.

— Exlusive Customs Today photo

— Exlusive Customs Today photo

n order to provide inexpensive and speedy justice to the people regarding malpractices and accountability of the government departments to ensure good governance in the country, FTO’s institution needs to be strengthened.

This was the crux of speeches at the workshop on “Challenges of Ombudsmanship” on Wednesday.

The two-day workshop on “Challenges of Ombudsmanship” was organized by Federal Tax Ombudsman Secretariat in collaboration with International Ombudsman Institute and the World Bank.

Federal Tax Ombudsman (FTO) Abdul Rauf Chaudhry inaugurated the workshop while Ejaz Ahmed Qureshi, National Commissioner for Children Wafaqi Mohtasib Secretariat, and Ahmed Awais Pirzada (Project Director) also spoke on the occasion.

Among others, the ceremony was also attended

by Justice (retd) Yasmin Abbasy, Dr. Mirza Phailbus and Country heads of the institutions like World Bank, UNDP. In his address, FTO Abdul Rauf Chaudhry said that the Ombudsman must show to be an effective entity, able to provide meaningful relief expediously to the common citizens, not only from the maladministration of state functionaries but from an increasingly assertive private sector that was making aggressive inroad into many areas previously seen as an exclusive domain of the state.

“Human right issues are now seen as a significant area of concern for the Ombudsman including the violation of human rights at the workplace, especially for women who are fast becoming important members of our workforce”, he remarked.

The FTO said that the test of Ombudsman today is how well the ofNice is able to overcome the many challenges that it faces, adding that a major challenge is to increase efNiciency of this ofNice without increasing expenditure.

fTo Abdur rauf Chaudhry, sectary Wafaqi mohtasib Atta ullah khan, Punjab’s ombudswoman Dr. mira Phailbus and Justice(r) Yasmin Abbasy in a group photo before giving certificates to participants of two-day workshop on Challenges of ombudsmanship.

kArAChi: Muhammad haroon agar, President Karachi chamber of commerce presenting chamber’s crest to Mr. Muhammad hanif Kasbati, chief Executive Officer, Pakistan Textile city Limited.

lAhorE: Ports and Shipping Minister Kamran Michael called on Governor Punjab ch. Muhammad Sarwar at Governor’s house.

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freefalling rupee poses serious threat to economy

LAHORE: Business community has expressed concern over the continuing fall in value of rupee against the US dollar as this posed a serious threat to the economy. Central Chairman PHMA Sardar Usman Ghani said that the country already is facing multiple internal and external challenges and the rupee devaluation is further aggravating the economic situation. He said that the constant downslide of rupee had adversely affected all important sectors of the economy including agriculture, industry, manufacturing, IT and commercial importers.

Pakistan to borrow $625m from banks to halt rupee slide akistan will borrow $625 million from a consortium of seven local and foreign banks to boost reserves and stem a slide in the rupee currency, a senior Finance Ministry official said.

"Talks with the banks have been taking place for the past few months. initially they were offering a loan with a 7.77 interest rate, but it was negotiated to 5.75 percent for one year," the official, rana asad amin, told reuters.

The rupee has lost nearly 7 percent of its value against the US dollar since the new government came to power in June.

One of the reasons Pakistan imposed a month-long ban on gold imports in august, apart from reports of gold smuggling to india, was because the government had been told by forex dealers that a significant amount of trade was used to cover gold imports, a market source told reuters. —CT report

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Transparency int’l urges FBr to verify tax returns of ViPs ransparency international Pakistan (TiP) has urged FBr to check the source of income of as many as 155 ViPs including parliamentarians, as per their income tax returns pertaining to tax years 2008, 2009, 2010, 2011 and 2012. in a letter written to FBr chairman Tariq Bajwa, the TiP has asked the Board to verify the source of income of these ‘very important persons,’who imported bulletproof vehicles for their security.

On Sept 16, 2013, Minister for Finance ishaq Dar told the National assembly that various importers had imported 155 bulletproof vehicles during the last five years after payment of duty/taxes.

Moreover, as many as 41 bulletproof vehicles were imported duty-free by the different individuals/persons, he added. —CT report

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commerce Minister calls Expo 2013

A show window on Pakistan Karachi

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ederal Minister of State for Commerce and Textile Industry Khurram Dastgir Khan has said that achieving high economic growth through fresh investment is the top priority of the government.

Talking to the media after inaugurating Expo Pakistan 2013 at Karachi Expo Centre, the Minister said that economic growth and increasing foreign trade were two cornerstones of the present government.

Referring to the expo he said, “Over the years, Expo Pakistan has developed into a world class event and provides an opportunity to portray a soft image of the country”. “Terrorist activities have tarnished the image of the country but events like trade fairs and cultural shows help a lot in mitigating the negative impact,” the Minister observed.

The Minister appreciated the initiative of the Trade Development Authority of Pakistan (TDAP)

Over the years, Expo Pakistan has developed into a world class event and provides an opportunity to portray a soft image of the country, says Federal Minister of State for commerce and Textile industry

khurram Dastgir

for regularly holding such mega events for the last eight years, particularly when the country is bogged down in a war against terrorism.

Responding to a question, the Minister said that despite severe energy crisis, there were visible signs of growth in economic activity. He said that the government was vigorously working on the energy sector and hopefully within the next two years the power shortages would be reduced to a greater extent.

Accompanied by Secretary Commerce Qasim M Niaz, TDAP Secretary Rabiya Javeri Agha and other high officials, the Minister visited different stalls and pavilions.

He first took a round of the Malaysian Pavilion where a large number of Malaysian companies displayed their products under the umbrella of Malaysian External Trade Development Corporation (Matrade).

He also showed keen interest in US Agency for International Development (USAID) pavilion displaying a variety of products under the banner of “Roshan Pakistan.” The products on display are manufactured in collaboration with local companies.

New tax concessions await final nod F

BR is going to get approved newly-drafted Statutory Regulatory Orders (SROs) by Finance Minister Ishaq Dar for new tax concessions and reduction in tax rates.

The sources said that FBR drafted the SROs after endorsement of Karachi-based business community and Ministry of Finance. However, FBR will issue the required notiNications after getting Ninal nod from Finance Minister Ishaq Dar on his return from the United States, the sources said, adding that the Board

has moved a summary to the Ministry seeking approval.

Sources explained that the newlydrafted SROs would allow refunds against local supplies under SRO.1125(I)/2011 and impose 2 per cent extra tax on retail price items and reduce withholding sales tax rate on purchases from unregistered persons from 17 to 1pc. Through SROs, the rate of withholding sales tax on purchases from unregistered persons would be reduced from 17 to 1 per cent, which will not be adjustable.

Items added in the Third Schedule to the Sales Tax Act 1990 vide Finance Bill 2013 (except for fertiliser and cement) would be omitted from the Third Schedule and subjected to 2 per cent extra tax in lieu of sales tax at retail stage. Under the draft notiNications, the items chargeable to sales tax on retail prices would be exempted from sales tax withholding regime, rate of withholding for wholesalers, dealers and distributors is being reduced from current level of one-Nifth to one-tenth. —CT Report

PiaF-Founders alliance sweeps Lcci polls LahOrE

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akistan industrial and Traders associations Front (PiaF) has thanked the businessmen for reposing confidence in PiaF-Founders alliance .

Sohail Lashari elected Lcci new president while Mian Tariq Misbah elected Senior Vice President and Kashif anwar elected Vice President. according to Lcci election schedule, September 26 was last date for filing of nominations for Lcci officebearers for year 2013-14 and no other candidate turned up for filing nomination against Sohail Lashari, Mian Tariq Misbah and Kashif anwar therefore all the three made their way to victory stand.

Earlier, PiaF-Founders alliance made clean sweep by winning all the 8 seats of Lcci corporate class for year 2013-14. Total 742 votes were polled out of 2275 while 16 votes were rejected due to technical reasons. PiaF-Founder alliance got 488 panel votes while the Progressive Group got 99 panel votes. PiaF-Founders alliance candidate Tahira Munir had already been elected unopposed on one seat reserved for woman.

Meanwhile, PiaF-Founders alliance made another clean sweep by winning all the 7 seats of Lcci associate class for year 2013-14 .

Total 1832 votes were polled out of 6068 while 43 votes were rejected due to technical reasons.

PiaF-Founder alliance got 994 panel votes while the rivals Progressive and azad groups secured 363 & 190 panel votes respectively.

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hELPDEsk WriTE 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

Appeal to the finance minister submitted by Data controlling assistants, customs Department To, Honourable Mr Ishaq Dar Federal Finance Minister, Government of Pakistan Islamabad

Sir, We, the Data Controlling Assistants (DCAs) working in the Computer Bureau Department of Customs House, Karachi, make the following submissions for your kind consideration: We 26 DCAs, currently working in Grade-10, have been waiting for our due promotions for

the last 15 years. For the restitution of our legitimate rights we filed an appeal in Federal Tribunal Service (FTS) in 2010 for the upgradation of our posts in the year 2010. FTS took up our cases in the year 2012 and then issued a detailed judgment on Jan 1, 2013, in which it stated that the department concerned should upgrade the post of the Data Control Assistants (BPS-10) to Data Processing Assistants (BPS-16).

However, in violation of the said order, the department took no action for our promotions.

We may mention here that we had been recruited in 1979, 1982 and 1986 in the Computer Bureau Department of Custom House.

It is pertinent to mention here that while we are waiting for our promotion, those who were appointed later and are less experienced than us have got promotions in BPS-14 and BPS-16 through ‘sifarish’.

Our promotion in Grade 14 was due in 1999 and in Grade 16 in the year 2006, but unfortunately no action has yet been

taken in our case. The lack of response from the department has not only resulted in colossal financial loss to us but is also causing us serious mental anxiety and uncertainty about our future.

In view of the above, we appeal to you to kindly look into the matter and issue orders to the relevant authorities to do justice in our case.

Respectfully yours Data Controlling Assistants Customs House, Karachi

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fbr employees’ union elections on oct 15

ISLAMABAD: The elections of FBR’s Federal Revenue Alliance Employees Union CBA will be held on October 15, 2013. Union President Rana Shakeel Ahmed informed Customs Today that there are 650 members in the union and the candidates will vie for 16 posts of the union office-bearers. Union President Rana Shakeel, Vice President Ghulam Rasool (Billa), Gen Secy M Sadiq Qureshi and Secy Information Malik Abid are very optimistic about their victory. They hoped that their panel would win the upcoming elections unopposed.

carTOONSSPEciaL

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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