Legalising non-duty paid items: FBR planning to launch scheme

The Federal Board of Revenue (FBR) is planning to launch a scheme on national level to provide an opportunity to the owners of smuggled goods to legalize non-duty paid items on payment of duties/taxes and fine/default surcharge.

According to a tweet of FBR Chairman Shabbar Zaidi on Saturday, the FBR is working in developing a 'expeditious settlement' of 'non duty paid' fast moving consumer goods available in the market. Details will be released next week. The purpose is to facilitate businessmen and improve documentation without disturbing business confidence.

Under FBR laws, the proposed scheme would cover all kinds of fast moving consumer goods i.e. consumer goods which are supplied in retail marketing as per daily demand of consumers. As per estimates, the volume of smuggled-prone items ranges from $9 to $10 billion per annum, but these are only guesstimates, sources said.

Under the proposed scheme, it would allow legalisation of non-duty paid goods available in the domestic markets. This means that the scheme may be applicable to smuggled goods available in local markets.

The scheme may not be applicable to non-duty paid smuggled vehicles. The scheme cannot be termed as amnesty scheme because legalization of goods may be allowed on payment of fine/penalty or default surcharge.

The exact details of this plan will be shared next week. In the aftermath of verification exercise carried out in major urban centers by the Customs staff/intelligence agency, the FBR has taken the policy decision to provide last opportunity to businessmen to legalize their smuggled items after paying duty, taxes and penalty/surcharge. However, the government may offer nominal rates of duties and taxes for legalization of such goods along with fine/penalty.

The is mulling giving last opportunity to businessmen involved in selling products within the premises of main city centers/markets to settle clearance of non duty paid fast moving consumer goods. Later, the FBR will launch stern action against smuggled items after expiry of upcoming proposed scheme.

FBR's Member Customs (Operation) Dr Jawad Uwais Agha is drafting the said scheme and FBR is considering offering a negligible duty rate for legalization of non-duty paid consumers goods.

Recently, Prime Minister Imran Khan approved establishment of Customs Authority to curb smuggling of goods worth billions of rupees taking place on the borders of Balochistan and Khyber Pakhtunkhwa every year.

Under the new policy, the first target of the government is to stop the theft, pilferage of revenue and financial loss to the national exchequer. The proposed scheme for domestic markets is also part of the said National Anti Smuggling Strategy.

This National Anti-Smuggling Strategy had been formulated and approved for the first time in Pakistan.

The special joint teams of the FBR had completed anti-smuggling drive which was launched from September 1, 2019 at major shopping centres and large retail outlets in all major cities to verify import documents of foreign goods available in the markets. The exercise was carried out to check smuggled goods sales in the country. However, it was only verification of import documents of foreign goods available for sales.

FBR Chairman Shabbar Zaidi has said that Pakistan's economy in general and industrial activities in particular are being seriously affected due to availability of smuggled goods, especially consumer goods in the markets. The government is undertaking various steps to curb these undesirable practices and some actions to this effect have also been incorporated in the Finance Act, 2019.

According to the FBR, it is strengthening its efforts and has started a phased programme in this regard which includes verification of import documents of foreign goods available in the markets.

Under the Provisions of the Customs Act, 1969, FBR has powers to seek import documents for the imported goods available for sale to consumers from the persons dealing in such goods. The FBR said that the exercise does not represent 'raid' on the premises or any coercive action against traders.

The purpose of this exercise was only to ensure that relevant import documents are available and foreign goods available for sale are properly backed by documents. According to sources, the total loss incurred due to smuggling every year was in billions and the figures were alarming for a country burdened with debt and inflation which in turn was creating problems for the common man.

Smuggling is one of the causes for shutting down of industries and loss of jobs. From July 2018 to September 2019, revenue increased by 56 percent through steps of the federal and provincial governments against smuggling.

Under the Customs Authority, coordination would be increased among different agencies including Customs intelligence, Federal Board of Revenue, Federal Investigation Agency, Intelligence Bureau and Military Intelligence on the customs checkposts on the borders of merged districts of Khyber Pakhtunkhwa and Balochistan along with Iran and Afghanistan.

Presently on the checkposts, the personnel of different agencies are deployed and there is no coordination among them as they are acting on their own and there is no database and sharing of information.

The Customs Authority replacing the Customs Directorate would mainstream the trade on borders and build a central database based on the latest technology, automation and best international practices putting an end to corruption and siphoning of money.

The Customs Department has been made the lead agency for anti-smuggling and all other departments are bound to support it. A Customs' Border Management Strategy has also been approved to effectively plug smuggling, promote industrialisation and export growth.