Any flawed decision to sanction changes in the Pakistan Customs Computerised System (PaCCS) may cost Pakistan billions of rupees in revenue collection, according to independent customs valuation experts here. The matter has reportedly been placed by concerned authorities before the Finance Minister for sanctioning changes.
Experts believe that it may be a better idea to implement the transactional value system throughout the country, rather than trying to bring back the Import Trade Price (ITP) regime, which is not legally maintainable. Nowadays, questions are being raised about the customs valuation system, its importance, effectiveness and weaknesses and its impact on the future of the country.
Experts say that this critical technical matter has been intentionally kept hidden from the public sight. The matter relates to PaCCS controversy and more importantly the future generations of Pakistan, experts said, adding that it is necessary to grasp the immensity of the significance of the customs valuation system.
Until the last decade, import and export tariffs have been very high. Duty and tax incidence on majority of items have been well above 100 percent. There were also stringent licensing requirements, strict foreign currency regulations, and impossible banking prerequisites. With such harsh code laws, international trade was limited in the hands of a few. High controls also meant colossal powers with the officials who had numerous techniques to milk the traders.
With the passage of time, international trade has increased due to low tariff regimes. Tariff barriers have come down to average of below 10 percent. Today, the restrictions on imports and exports are virtually non-existent, and anybody can participate in international trade. The ability of customs officials to bend traders has also lessened. The most potent device left with the customs officials was their unbridled power to determine and impose arbitrary value on any item.
In 1995, Pakistan signed Article 14 of General Agreement on Tariff and Trade (GATT) Code of Valuation at World Trade Organisation (WTO). Under the international commitment, Pakistan could avail a maximum five-year grace period to prepare its system for the transactional value concept, as opposed to the ITP concept.
In 2000, the transactional value concept was enforced in the customs law of Pakistan, eliminating the final discretionary powers of officials concerned. Unfortunately, however, the duality between the law and practice continued, with customs officials jealously defending their powers.
In 2005, PaCCS was launched in Pakistan. This automated computerised system put an end to the contradictions between the law and practice. The development sent shockwaves among officials and dishonest elements in trade who are now desperately trying to dominate PaCCS by changing it to their brand of valuation. Needless to say, PaCCS system is collecting more revenue than any other collectorate in the country. Had the system not been perfect, the results would have told a different story, experts said.
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