ISLAMABAD: In what appears to be the last resort, Pakistan Customs has related the inking of an Electronic Data Exchange (EDE) agreement with the United Arab Emirates to curbing the danger of under-invoicing by the importers of the region (UAE).
Over the past few years, United Arab Emirates ports have emerged as a leading source of under-invoicing for Pakistani importers who in order to minimise their tax payments, declare their goods less expensive there. At the Federal Board of Revenue (FBR) Policy Board meeting chaired by Finance Advisor Dr Hafeez Shaikh on Thursday, the issue of under-invoicing was raised, among others.
Dawn was told by a well-placed source privy to the meeting that Indian products are also being diverted to Pakistan via United Arab Emirates ports with a change of origin. The source added that this is a serious topic of concern for the Pakistani authorities.
In response to India’s decision to abolish Article 370 of its constitution, which gave special status to occupied Kashmir in August 2019, Pakistan suspended its trade ties with India.UAE
The FBR Policy Board was briefed on the measures taken to monitor the threat so far including Pakistan’s call for the signing of the agreement by the Emirati authorities. In this regard, we have already demanded the United Arab Emirates authority,” the source stated.” However, so far no response has been obtained, the source said.
Commercial imports from Pakistan, minus United Arab Emirates crude, were $1.6 billion.
The source said Pakistan Customs asked the Ministry of Finance to diplomatically take up the topic with the Gulf nation for the signing of the EDE.
On the income tax side, the FBR also contacted the UAE Ministry of Finance to provide information on those Pakistanis who were pursuing an iqama (work permit) under an investment scheme to cover their illicit wealth.
According to the source, China’s under-invoicing has been reduced to an extent thanks to the electronic sharing of import value dates between the two countries. As a result, products’ valuation tables have also been revised United Arab Emirates
By March 31, 2021, the valuation tables and other steps will be completed to control under-invoicing the source added. The new system will also be further updated, with the Customs Department also integrating artificial intelligence into the customs clearance process by the end of June 2021, the source said.
The official statement released after the meeting stated that Tariq Huda made a comprehensive presentation on the Customs Valuation (under-invoicing) of the Member Customs Operations and outlined the steps that will be taken to bridge the gaps and improve the revenues of the department in the future.
He told the meeting that the FBR had released Valuation Rulings and signed EDE agreements with China, Iran, Afghanistan, etc to effectively resolve the problem of import under-invoicing. These negotiations have, he said, shown good outcomes.
In order to make the FBR more successful, the finance adviser emphasised the need to assess the clearance period with regard to the international trading partners.
Privatisation Minister Mohammad Soomro, Special Assistant to Revenue Minister Dr Waqar Masood, PM Advisor on Structural Changes and Austerity Dr Ishrat Husain, and Minister of Industry and Development Hammad Azhar also attended the Policy Board meeting.