Improving revenue collection: RAC asks FBR to check smuggling in garb of ATT

Revenue Advisory Council (RAC) has directed the Federal Board of Revenue (FBR) to control smuggling in the garb of Afghan Transit Trade (ATT) for improving revenue collection during second half (January-June) of fiscal year 2009-2010. Sources told Business Recorder here on Monday that the issue was discussed during the last meeting of RAC to take administrative measures for increasing collection instead of new revenue generation measures.
One of the important enforcement measures proposed in the meeting was checking of smuggling in the garb of ATT to improve customs duty collection. Recently, tax authorities have informed the National Assembly Standing Committee on Finance that the estimated volume of smuggling was around $4 to 5 billion per annum with a revenue loss of nearly $2.5 billion due to the illicit trade. Around, 75 percent of the illicit trade is carried out on the back of Afghan Transit Trade Agreement (ATTA).
The revenue loss due to smuggling in the garb of ATT is so high that controlling the menace would substantially increase collection in 2009-10. Sources said that the government would have to introduce additional routes for entry and exit of transit cargo under the new ATTA between Pakistan and Afghanistan.
In case, these routes are not from the ports of Pakistan, the procedure for their clearance, transit or transshipment shall be incorporated in a separate protocol of the proposed transit agreement, it urged. It has been further proposed that measures should be taken in case goods are being allowed in transit, which are smuggled back and hurting the economy, industry or import revenue.
In such cases, the government should be allowed to impose a ban on the import of certain items or levy import duties at a higher rate. Pakistani side has proposed to bring rates of customs duty at similar level on smuggling prone items in both the countries.
Both Pakistan and Afghanistan should apply similar valuation method on such goods in both countries and duty should be collected at Karachi on goods imported for Afghanistan. The collected duty could be transferred to Kabul. There is a need of placing quantitative restriction on goods to check their actual consumption in Afghanistan. On the basis of quantitative restrictions, specific quota should be allocated keeping in view actual consumption of the Afghan goods.