The Central Board of Revenue (CBR) will amend the baggage rules, procedure for operating duty free shops and rules dealing with the tax exemptions for the diplomats/privileged persons in budget 2005-2006 to control large scale smuggling of foreign goods.
The CBR is considering minimising the concessions in duties for persons who stayed abroad for less than 90 days to stop the supply of foreign goods to Bara markets by the organised gangs misusing baggage rules. Official sources told Business Recorder on Sunday that the facility of duty free shops, set up mostly to benefit overseas Pakistanis, has been grossly misused for smuggling of goods.
The sales by these duty free shops are made against fake and forged documents for clearance of duties and taxes free goods.
According to CBR, the duty free concessions for diplomats and other privileged persons are also being abused to the detriment of public exchequer and local industry. Pakistan has the most liberal policy for diplomats and privileged persons, which has resulted in free availability of foreign goods.
The CBR observed that the two diplomatic bonds set up in Karachi and Islamabad have been found involved in selling goods without taxes under the fake exemption certificates and export order. Thus, there is a need to revise the relevant rules and regulations to check misuse through this facility.
On the issue of baggage rules, the CBR pointed out that the baggage rules have been traditionally liberal to facilitate overseas Pakistanis, who are major source of earning of foreign exchange. This facility of liberal baggage rules is however, abused by daily trippers (Khepias) and wealthy people who frequently visit abroad either for vacations or for promotion of their business. Thus influx of foreign origin goods through this scheme is contributing to diversion of demand from locally-made goods to foreign origin goods.
Presently, baggage rules particularly the rules that allow duty free allowance to the passengers having less than six months stay abroad, are very liberal and encourage the import of goods in commercial quantity under the guise of bona-fide baggage by frequent travellers and Khepias. Therefore, it is imperative that concession in duties for passengers with less than 90 days stay abroad should be curtailed to the minimum so that the supply of goods to Bara markets through baggage is reduced.
Similarly, there is a need to review the duty free allowances for purchase from duty free shops and diplomatic bonds. The CBR proposed that the quantity of items allowed to be purchased duty free, be fixed with safeguards so that there are no fake/double purchases under these concessions, the CBR said.
According to CBR, the abuse of diplomatic privileges has been used to supply the demand of alcohol in the country. In 2002-2003, the Directorate General of Customs Intelligence and Investigation and Collector of Customs Port Qasim seized thousands of bottles of alcoholic beverages from containers belonging to diplomats which was far in excess of the permissible limit allowed to them. The diplomatic bonded warehouses are also used for supply of alcoholic beverages in various parts of the country, it added.
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