This unpleasant situation emerged during briefing by the FBR Chief (Exports) on under invoicing of IT equipment and subsequent loss to the exchequer. The issue of import of IT equipment has been under discussion in the committee for the last many months. Leader of the House Senator Shibli Faraz has been raising this issue for awhile.
Faraz questions how it is possible for an LC to be opened in the name of one person or company whereas the Bill of Lading (BL) is the name of another person/company and the consignment is cleared by a third party; he maintains that the bank has to also be involved in this exercise and has summoned the concerned bank in the next meeting. According to him, invoices were forged with the help of FBR.
On a query, Secretary Commerce Ahmad Nawaz Sukhera informed the committee that according to the import policy order, it is the responsibility of Commerce Division to devise a policy in consultation with the stakeholders. Director General Trade Commerce, Muhammad Ashraf explained the mechanism as follows: "smuggling and under invoicing of IT related goods and equipment are inflicting Rs 8 billion financial loss to national exchequer and money laundering of 400-500 million dollar."
Secretary Commerce gave a commitment to the committee that he would bring all the stockholders on board and sort this issue out within 15 days.
Javed Bilwani, a top representative of exporters proposed that if Master Bill of Lading is made mandatory instead of House Bill of Lading, this issue will be resolved. He said business community has already tabled this proposal. The committee also suggested Secretary Commerce to consider this proposal.
FBR's Member Policy explained the steps being taken by the FBR to curb under invoicing of IT equipment which include specifications of each product along with its size. However, FBR officials acknowledged that there are issues of under invoicing and smuggling and presently 20-35 cases have been indentified for further probe. The committee was informed that the main issue of smuggling is lower duties in Afghanistan.
Chairman Standing Committee argued that domestic industry is disturbed due to under invoicing and smuggling, adding that increase in import volume of Afghanistan indicates that goods are being flooded in Pakistani markets.
Senator Shibli Faraz said he was not implying that FBR was conniving in smuggling but added that he was concerned about legal smuggling.
Javed Bilwani accused FBR of shutting down the entire business due to a complicated refund form adding that only 40-45 exporters out of 300-400 had been given refunds. He stated that FBR's mechanism was as complicated as India's non tariff barriers to discourage Pakistani exports.
FBR's Chief Sales Tax, Hamid Memon acknowledged that there were transitional issues in implementing a "faster system", adding that refunds were being released on the basis of stocks claims. He said, since August 2019, FBR had processed claims of Rs 263 million of which claims of Rs 220 million had been released out of total claims of Rs 1 billion received by the FBR.
Anjum Nisar, one of the country's top businessmen said that FBR should accept that there were loopholes in the system due to which facilities were being misused. He further stated that business community should be facilitated.
Secretary Commerce informed the Committee that Prime Minister Imran Khan has directed Advisor Finance, Advisor Commerce Minister for Economic Affairs and Chairman FBR to sort out issues of business community immediately.
Javed Ghnai, Member (Customs-Policy) and Dr Jawad Uwais Agha (Member Customs Operation also briefed the committee.
