The Pakistan Business Council (PBC) has issued a stark warning regarding the harmful impacts of massive under-invoicing by commercial importers, stating that this practice is severely damaging Pakistan’s domestic industries.
In its recent communication to the Federal Board of Revenue (FBR) concerning the 2024-25 budget proposals, the PBC highlighted the increasing trend of under-invoicing and the dumping of imported products.
According to the PBC, the lack of public access to the values at which customs check posts clear import consignments facilitates this unethical practice. This opacity allows dishonest importers to under-declare the value of their consignments, thereby evading taxes and undercutting domestic manufacturers with unfairly priced goods.
The council has proposed several measures to combat these discrepancies and protect the local industry. One of the key suggestions is to make the values at which import shipments are cleared through the Pakistan Revenue Automation Ltd (PRAL) or the Customs Automated Risk Evaluation (CARE) system publicly available. This transparency would make it more difficult for importers to declare falsely low values.
Moreover, the PBC is urging the government to mandate the use of Electronic Data Interchange (EDI) for both Free Trade Agreement (FTA) and non-FTA imports, particularly from China and other major trading partners. The council suggests that this requirement should be extended to imports from all FTA, Preferential Trade Agreement (PTA), and significant trading partner countries in the future.
Another significant reform proposed involves amending Sections 25(A) and 25(D) of the Custom Act of 1969. The amendment would allow local manufacturers to participate in setting the Import Transaction Price (ITP), countering the current system where only commercial importers are represented. This change aims to eliminate biased decisions that favor importers at the expense of local industries and government revenue.
The PBC also recommends that valuation rulings should be issued in consultation with brand owners who hold valid registrations under relevant intellectual property laws. This would ensure that imported goods are valued correctly and in accordance with their legitimate market worth.
These recommendations come in response to several judgments from the Sindh High Court, which have declared that local manufacturers currently have no standing in the determination or enhancement of the customs value of imported goods. The PBC believes that involving local manufacturers in these decisions would not only help in safeguarding domestic industries but also enhance the collection of taxes and duties through fairer trade practices.
The PBC’s proposals aim to level the playing field for genuine importers and domestic manufacturers, ensuring that competition is fair and that the government does not lose out on crucial revenue from under-reported imports.
