KARACHI: Pakistan Customs proposed the Federal Board of Revenue (FBR) to impose five to 20 percent regulatory duties on a number of importable goods to avert the incidences of mis-declaration, which cause revenue losses to national exchequer.
“Various statutory rates of import duty, under the FTA (free trade agreement) regime provide opportunity to the importers to get items cleared under the minimum duty slab,” said the Customs Appraisement South, in its budget proposals for 2016/17. “It is, therefore, proposed that regulatory duty be enhanced to 15 percent from existing 10 percent on import of woven cotton fabric.”
There are various rates of import duty on similar goods with only structural formation difference. Generally, the importers declare goods with vague and fake descriptions to claim the minimum duty slab.
“It is proposed that regulatory duty be imposed on goods importable under lower duty slabs to rationalise the duty structure,” said the Customs Appraisement South.
The department advised the FBR to specify same concessionary rate of sales tax on raw materials and goods imported by manufacturers/industrial consumers as well as commercial importers.
“Commercial importers as well as industrial consumers should be given same rates of sales tax as it is difficult to check genuine manufacturers at import stage,” it said.
According to a statutory regulatory order (1125(I)/2011), sales tax is charged at three percent on industrial inputs imported by manufacturers of the five export-oriented sectors. In case of commercial importers, value addition tax of three percent is also charged in addition to one percent sales tax at the import stage.
“A majority of the commercial importers have managed to got themselves registered as ‘manufacturer’ with a view to misuse the SRO, resulting in revenue loss,” the budget proposals document said.
For example, it added that the balance of imports of textile yarn has abnormally shifted in favour of manufacturers from commercial importers.
The Customs Appraisement South also proposed the FBR to withdraw duty and tax concessions available to the aviation industry.
Presently, duty concessions are available on import of ground handling equipment, service and operation vehicles, catering equipment and fuel trucks, not manufactured locally and imported by domestic airlines or by any other service company to which a licence has been issued by the Civil Aviation Authority for such purposes. The customs advocated the omission of these concessions, saying the private sector has entered into this field, and is earning substantial profit owing to the flourishing business.
“Even no exemption is granted to this sector in the U.S. and other countries,” said the document.