e-commerce platforms facilitating trade of smuggled smartphones?

KARACHI: Some of the leading e-commerce platforms have said to be the biggest source for trading non-PTA-approved expensive smuggled smartphones in the country.

“If you want to buy a highly expensive smartphone but don’t want to pay taxes, there’s no need to search anywhere else - Pakistan’s e-commerce platforms with over 4 million active monthly users, are your go-to place to get smuggled or non-PTA approved phones at the best prices with a 6-month warranty,” said a market source.

He said these e-commerce platforms have emerged as the biggest facilitator for trading such illegal smartphones in the country due to the Federal Board of Revenue’s (FBR) glaring neglect to enforce strict policies on digital marketplaces, according to tax experts.

Network of mobile phone smugglers, dealers detected

A source related to one of such e-commerce platforms, who requested anonymity, claimed that their platform has stringent guidelines, stating, “Nobody can sell anything on our platform - we have strict policy guidelines for sellers to ensure pleasant shopping experience for our app users.”

He elaborated on registering sellers, mentioning that the business owners could only be allowed to sell products on our platform after proper verification of business details to ensure authenticity of the businesses.

However, it has been observed that when it comes to the hefty 13% commission on expensive smartphones, all policies seem to support facilitating the sale of smuggled devices. Astonishingly, the certified stores for Samsung and Apple products on Pakistan’s leading marketplaces openly sell smuggled non-PTA-approved phones. Instead of cracking down, these e-commerce sites offer a six-month warranty to attract more commission revenue.

While the Special Investment Facilitation Council (SIFC) is striving to revive the economy and aims to make FBR efficient and transparent through reforms, the revenue authority’s ineptitude is encouraging such marketplaces to facilitate the trade of non-PTA approved smuggled smartphones with no fear of any legal action because they know how to deal with FBR, a tax expert remarked.

Some tax experts did not rule out the possibility that concerned FBR officials were well aware of such illicit trade on these platforms, causing a serious financial dent to the national economy. However, no action is being taken, likely due to the prevalence of corruption within FBR, which allows Pakistan’s largest e-commerce sites to promote such illicit activities under the FBR’s nose.

“If that is not the case, then the FBR has exhibited extreme incompetence to address digital age challenges, indicating the urgency of reforms in the FBR on modern lines to avert such challenges in the future,” the experts stated.

They highlighted that every department within FBR, whether Inland Revenue Service or Customs, has its anti-smuggling unit. However, all of them have remained unable to create an impact as they are using decades-old techniques to counter the menace of smuggling.

As a result, despite having multiple anti-smuggling units and spending considerable financial resources, the board could not achieve the desired results because neither FBR nor these anti-smuggling departments are interested in rooting out smuggling from the country, fairly.

Tax experts stated that under the laws, e-commerce platforms and their sellers were equally responsible for this offence, and tax departments had the power to take action against them. However, when approached, high officials in different anti-smuggling units admitted they had the powers but did not provide a satisfactory explanation for their inaction in this matter.

Copyright Business Recorder, 2024