The Federal Board of Revenue (FBR) has directed the customs department to revise values of commodities, for accurate calculation of duties and taxes, keeping in view international changes in cases where values were fixed in 2004.
Sources told Business Recorder on Monday that the collectors of customs in quarterly conference had discussed threadbare the measures to tackle the menace of under-invoicing and misdeclaration of imported goods.
It was brought to the notice of the board that despite changes in the international values, the customs had not changed the values of certain items, which were earlier fixed in 2004. Whenever there was a change in value internationally, the fixation of price needed to be reviewed for accurate calculation of duties and taxes. It is, therefore, necessary to change the values in line with the global practice. The FBR has directed the customs wing to constantly monitor the international prices of commodities, for revaluation purposes.
It was decided to enforce valuation the powers given to the Directorate General, Valuation, in the 2007-08 budget. The customs values determined would be applicable for value assessment of the imported goods. The powers to determine, and notify, the values of different categories of goods were given to customs to counter the menace of under-invoicing.
Sources said that the tax authorities expressed concern over the attitude of customs in not properly checking the menace of under-invoicing and misdeclaration. It was conveyed to the collectors that under-invoicing would not be tolerated in any case, and relevant provisions of the Customs Act, 1969 should be invoked for controlling this menace.
FBR chairman M Abdullah Yusuf directed the collectors of customs to pay special attention to two areas ie misdeclaration and under-invoicing. He said that the major problem, being faced by customs department, was valuation of imported goods, for which collectors should effectively deal with the issue to control revenue loss.
He said that FBR had lost considerable revenue due to under-valuation in last financial year. The tax machinery should not allow this problem to continue in the current fiscal year for which concerted efforts were to be made by the collectorates.
There is need to strictly follow the newly evolved valuation system to avoid revenue loss. The under-valuation was also damaging the local industry and weakening its competitiveness and cost- effectiveness. The problem of smuggling should be addressed properly by the customs collectors.
In this connection, Member Customs informed the conference about the details of the agreement inked with Chinese customs for exchange of data to check under-invoicing.
Member Customs inquired about the utilisation of Chinese data by the collectors of customs. He asked the collectors whether the import/export data had been analysed by the collectors, as no collector had given any response on this issue. Collectors should properly utilise data for checking under-invoicing on the imports from China.
Sources said that FBR Chairman directed the customs authorities to take measures for meeting the customs duty target of Rs 154 billion in 2007-08 for meeting the Rs 1.025 trillion revenue collection target during this period. The FBR has directed the collectors to take measures with the start of the new fiscal year to meet the target in 2007-08.
The board generated an additional amount of Rs one billion from recovery of arrears during the last ten days of 2006-07. This amount could have been generated even at an early stage, instead of focusing in last days.
On surpassing revenue collection target of Rs 835 billion in 2006-07, tax authorities remarked that it was due to combined efforts of all employees along with buoyancy of the country's economy.
While reviewing the performance of various reforms units, FBR chairman said that the board was trying to introduce a major change in taxation system, which could benefit all stakeholders ie government, taxpayers and the employees of the department. The board would not allow vested interests to sabotage the on-going reforms, which must be timely completed.
The conference was further informed that the major cause of shortfall in customs duty collection in 2006-07 was reduction in dutiable imports. Despite the fact that there was a growth of 8 percent in overall imports of the country, the dutiable imports had declined by 4.1 percent. Shortfall in dutiable imports was mainly due to reduction in import of vehicles, which was the result of change in the government's policy announced last year. The share of dutiable imports in total reduced from 61.4 percent to 54.5 percent.
It was informed that overall revenue collection stood at Rs 841.4 billion in 2006-2007 against target of Rs 835 billion, registering a growth of Rs 6.4 billion.
Updated break-up revealed that sales tax collection was Rs 309.6 billion against a target of Rs 311 billion (99.5percent), federal excise collection was Rs 70 billion and customs duty was Rs 132.1 billion against a target of Rs 134 billion showing an increase of 98.6 percent.
Member Customs Shahid Rahim Sheikh, highlighting the performance of various collectorates in last fiscal year, said that 99 percent of the revised duty collection target had been achieved.
In another presentation on Sust Dry Port, the improvement achieved in its working through streamlining systems and procedures was highlighted. The Chairman expressed satisfaction over the steps taken and directed the concerned collector to improve the situation further. The board directed the customs department to formulate a comprehensive plan for controlling smuggling, misdeclaration, under-invoicing and under-valuation.
For implementation of Post-Clearance Audit (PCA), the board constituted a committee comprising member customs, member audit and other senior officials for monitoring the whole project. Interestingly, Project Director, PCA was not present in the quarterly conference.