The Federal Board of Revenue (FBR) has unearthed massive leakage of revenue at the import stage, including wrong application of withholding tax, inadmissible allowance of withholding tax exemption, application of invalid notifications and applicability of customs duty at reduced rates.
Sources told Business Recorder here on Tuesday that the board has constituted a ''joint'' committee, comprising customs and income tax officials, to check massive leakage of withholding taxes at the import stage for improving revenue collection in last quarter (April-June) of 2009-10.
The committee, headed by Collector of Model Customs Collectorate (MCC) Appraisement, would check leakage of withholding tax at the import stage. It has been estimated that the FBR can generate additional revenue to the tune of billions of rupees by accurate application of withholding taxes on the import of consignments under ''One Customs'' clearance system.
Details show that the officials of the Directorate General of Withholding Taxes would be deputed at ports in Karachi to monitor clearances of consignments under ''One Customs'' system to check leakage of revenue. The action has been taken on a report of Director General WHT, which has identified certain risk areas where massive leakage of withholding taxes is taking place at the import stage. The WHT DG report has given specific incidences of revenue leakages and similar nature of cases would be pinpointed during checking process.
The committee would analyse the imports to check clearance of consignments where withholding taxes have been wrongly applied to evade taxes at the import stage. The committee has been given the mandate to check cases where customs duty has been charged at lower rate as compared to the prescribed rates. The application of invalid SROs would also result in excessive loss to the revenue exchequer.
It is worth mentioning that the board had identified Karachi Port, Port Qasim, dry ports, international airports, border customs posts, bonded warehouses and international mail/parcels as major sources of withholding tax collection at the import stage. The FBR had also dispatched a separate list of priority areas for collection of withholding tax on exports. In this regard, the withholding agents included foreign exchange branches of commercial banks, authorised foreign exchange dealers, Export Processing Zone Authority (EPZA), and collectors of customs.