PCJCCI de­mands trans­par­ent global cus­toms val­u­a­tion sys­tem

The Pak Banker - - NATIONAL - Ja­hangir Hayat

Trade sta­tis­tics vari­a­tion shown by Pak­istan and Chi­nese cus­toms author­i­ties needs to be ad­dressed by the im­ple­men­ta­tion of trans­par­ent, co­her­ent and fully in­te­grated global cus­toms val­u­a­tion sys­tem with a strict check on over and un­der-in­voic­ing.

This was stated by Pak-China Joint Cham­ber of Com­merce and In­dus­try (PCJCCI) Pres­i­dent Shah Faisal Afridi in a press state­ment. He said that Val­ues and prices are al­tered through fal­sein­voic­ing, over-in­voic­ing, un­der-in­voic­ing and smug­gling. He in­formed that ac­cord­ing to some of­fi­cial re­ports some $4.4bn un­der in­voic­ing is be­ing com­mit­ted in im­ports from China.

Afridi, said that un­der-in­voic­ing not only de­prive the state of huge rev­enues but the prac­tice also hurts the do­mes­tic in­dus­tries, which are de­nied level-play­ing field due to un­der-in­voiced prod­ucts, he said adding that this prac­tice should be mon­i­tored with strong po­lit­i­cal will.

He as­serted that es­tab­lish­ment of a val­u­a­tion data­base and cus­toms mod­ern­iza­tion is in­con­ceiv­able with­out ad­e­quate in­vest­ment in in­for­ma­tion tech­nol­ogy. Enor­mous amount of data re­quires to be an­a­lyzed and com­pared with the de­clared val­ues, which can only be done by em­ploy­ing ad­e­quate com­put­ing re­sources, said Afridi. It is im­per­a­tive that a cus­toms ad­min­is­tra­tion want­ing to tackle large value mis-dec­la­ra­tion be ad­e­quately equipped with nec­es­sary com­puter hard­ware and soft­ware, he added.

He ex­pli­cated that over- and un­der-in­voic­ing of ex­ports and im­ports can have sig­nif­i­cant tax im­pli­ca­tions. An ex­porter, who over-in­voices the value of the goods that he ships, may be able to sig­nif­i­cantly in­crease the value of the ex­port tax credit (or value-added tax (VAT) re­bate) that he re­ceives.

Sim­i­larly, an im­porter who is un­der-in­voiced for the value of the goods that he re­ceives may be able to sig­nif­i­cantly re­duce the value of the im­port du­ties (or cus­toms taxes) that he pays. Faisal Afridi termed both of these cases as the acute means of trade-based money laun­der­ing and abuse of the tax sys­tem.

He fur­ther pointed out that thou­sands of in­dus­trial units have been ren­dered sick, due to the avail­abil­ity of smug­gled goods in open mar­kets. The most glar­ing ex­am­ple is Afghan Transit Trade which is the main source of smug­gling into Pak­istan and its an­nual vol­ume has been es­ti­mat- ed about five to six bil­lion dol­lars, about 70% of the to­tal smug­gling caus­ing a rev­enue loss of about 2.5 to 3 bil­lion dol­lars an­nu­ally.

He sug­gested num­ber of prac­ti­cal steps to be taken to im­prove the ca­pac­ity of na­tional author­i­ties to ad­dress the threat of trade-based money laun­der­ing, which in­clude the train­ing pro­grams to bet­ter iden­tify trade-based money laun­der­ing tech­niques, ef­fec­tive in­for­ma­tion shar­ing among com­pe­tent author­i­ties at the na­tional level, and greater re­courses to mem­o­randa of un­der­stand­ing and mu­tual as­sis­tance agree­ments to strengthen in­ter­na­tional co­op­er­a­tion.

He pointed out that if the gov­ern­ment fails to con­trol ma­nip­u­la­tion and al­ter­ation in cus­toms value, it will not only cause a con­tin­u­ous rev­enue loss but would also cre­ate a hos­tile trad­ing en­vi­ron­ment for hon­est traders by dis­tort­ing the mar­ket.

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