The Overseas Investors Chamber of Commerce and Industry (OICCI) has called upon Pakistan to take decisive action against retailers and manufacturers involved in illicit trade.
They have proposed stringent measures to confiscate illicit stocks and bring these entities into the tax net, as part of their recommendations for the upcoming budget of 2023-2024.
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In their proposals, the OICCI has outlined several key measures to combat illicit trade and safeguard transparency in the trade sector:
1. Enhanced Transparency and Controls: i. Make import data restrictively public to ensure transparency, facilitating the takeover of goods under Section 25A of the Custom Act, 1969. ii. Introduce stricter penalties, including criminal liability, for illicit trade at all levels of the value chain – retailers, distributors, and manufacturers. iii. Establish a special division or task force to conduct raids on retailers and manufacturers, enabling the confiscation and destruction of illicit stocks.
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2. Effective Custom Valuation: i. Adopt the latest methods of valuation, such as online search and comparison with international and regional pricing, with the involvement of local legal brand owners. ii. Prevent unauthorized imports of counterfeit products through brand registration with custom authorities in collaboration with the original brand owners registered in Pakistan.
3. Afghan Transit Trade Management:
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i. Revise the Afghan Transit Trade Agreement (ATTA) based on current realities to protect Pakistan’s revenue base, engaging key stakeholders from the OICCI and the local business community.
ii. Harmonize duty and tax rates to minimize incentives for evasion.
iii. Set quantitative limits for imports based on genuine Afghan needs and population size.
iv. Collect duty/taxes at the point of entry into Pakistan on behalf of the Afghanistan Government.
v. Establish a negative list of items that are not utilized in Afghanistan but are illegally imported into Pakistan.
vi. Install vehicle trackers and scanners along the Pakistan-Afghanistan border.
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vii. Ensure Afghan importers file entries in the WeBOC system of Afghanistan, granting Pakistan authorities access to the information. Containers not cleared within 7 days of release from Pakistan ports should be flagged as high-risk. viii. Prominently label cartons as “Only for Afghan Export.”
ix. Prohibit containers from entering Afghanistan if retail prices or sales tax information is printed on wrappers.
The OICCI’s recommendations highlight the urgent need for Pakistan to address illicit trade and ensure transparency and compliance within the retail and manufacturing sectors. Implementing the proposed measures, including conducting raids, establishing stronger controls, and enhancing customs practices, will help curb illicit trade and create a more favorable business environment in the country.
