The Federal Board of Revenue (FBR) has conveyed to the Ministry of Finance that regular payment in US dollars is necessary to Agility, Kuwait-based logistics provider, to avoid immediate shutdown of Pakistan Customs Automated Clearance System (PaCCS), which would destroy the dwindling international image of Pakistan in the eyes foreign investors, importers, non-resident companies and global trade bodies.
Sources told Business Recorder here on Saturday that the FBR has submitted a plan to the Ministry of Finance for making timely payment to ensure continuation of PaCCS functioning and avoiding any situation which may lead to sudden closure of the customs clearance system. At the moment, the government shall endeavour to engage Agility in positive negotiations and all efforts shall be directed to avoid any shut down of PaCCS as it would have deep ramifications for trade, trade facilitation, revenue generation and may tarnish the international image of government of Pakistan (GOP).
The monthly payments of $1.335 million to Agility are not much compared to the loss GOP might suffer in case of closure of PaCCS. It has been apprehended that the closure of PaCCS would have serious revenue implications on Pakistan as compared to savings due to non-payment to the said company.
Sources said that a payment of $1.4 million was also made to Agility by GOP in the first week of August 2011. A team of BR officers, headed by its Chairman, visited Dubai on September 14-15, 2011 and held negotiations with the company. It was agreed that FBR would continue to meet the demands for Agility for monthly payments which FBR considers to be a token payment adjustable towards final settlement.
It was also agreed by the company that instead of the demanded amount of $1.335 million per month FBR will pay $0.89 million per month for the period September 15, 2011 to November 15, 2011. Till today the FBR has paid around $8.8 million to Agility. There was also November 5, 2011 deadline to make payment of $0.89 million without prejudice and adjustable in the final settlement.
The GOP intends to pay $0.90 million to the company instead of $0.89 (as asked by Agility) so that tax authorities can firm up the stance that the amount paid was not monthly fee as asked/contended by Agility but a token payment and a goodwill gesture which will be adjustable towards the full and final settlement as payment already made.
In view of these circumstances and to keep the system alive, another token payment of $0.90 million to Agility was made in October 2011 provided that the same will be adjustable towards the full and final settlement, sources said.
The earlier payments, totalling $8.8 million, were made to the party from the Customs Private account titled "Collector of Customs PaCCS Systems, Support and Processing Account", being maintained at NBP Customs House Karachi and from FBR''s Account titled "Payment to others for services rendered" from the annual Budget Grant of FBR for year 2011-12.
The current balance after the payments in the Customs Private account titled "Collector of Customs PaCCS Systems, Support and Processing Account is almost ''nil''. Finance Minister may consider directing the Finance Division to allocate a sum of $0.90 million as an additional Budget grant for FBR under the head of account "Payment to others for services rendered" and allow permission for paying the same in foreign Currency ($) to Agility''s Account via State Bank of Pakistan. In this connection, the FBR has made a formal request to the Ministry of Finance for making payment to the said company on monthly basis.
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