Govt urged to curb sale of smuggled tyres

• ‘Govt should re-evaluate the data of items being imported via Afghan Transit Trade’

ISLAMABAD: Local tyre manufacturers have urged the government to curb the menace of smuggling and address the Import Trade Price (ITP) values, which would help the government build a documented economy and minimise the evasion of taxes.

Industry sources suggested the Federal Board of Revenue (FBR) ensure that no undocumented tyres are sold in the market, adding that FBR should raid the markets and seize the undocumented tyres, as smuggled tyres are being sold openly in the commercial centres.

“For starters, the government should re-evaluate the data of items being imported via the Afghan Transit Trade (ATT) and see if the tyres being imported are supported by the vehicle population in Afghanistan. Items under the guise of ATT are either unloaded in Karachi or they come back from the Afghan border via smuggling. This needs to be addressed and the customs department needs to ensure that this facility is not misused,” they said.

Similarly, they noted, a large number of tyres are reportedly being smuggled from Iran, adding that the government should ensure that these smuggled tyres do not cross the Taftan check post.

“As far as ITP values are concerned, the time has come for the government to ask the Chinese authorities with regard to the exchange of trade data so that anomalies could be stopped. This would provide a level playing field to the industry and as a result, fair competition would take place and the ultimate beneficiary would be the consumer,” they stated.

Sources said implementation of the above would streamline the industry in two years. The tax base would be broadened while under-invoicing would reduce, smuggled goods would not be available in main cities, income tax as well as sales tax collection would go up, collection of customs duty/sales tax at import stage would greatly improve; a level playing field would lead to much-needed industrial growth leading to more jobs, budget deficit would reduce, ‘Made in Pakistan’ products would be in demand, and ultimately exports would rise, they added.

In view of the above benefits, the sooner the government starts its campaign to document the economy and revisit the ITPs, better it would be, sources said, adding that these measures would categorically help the government prosper and increase its revenue by supporting its local industry to flourish.

“Another area which we believe should be highlighted is the unjustified ITP of tyres being imported into Pakistan. The import trade prices have never reflected the true nature of the cost and freight prices that actually exist. Local tyre industry has been fighting for years to rectify this anomaly,” industry sources regretted.

They noted that Chinese tyres make up 70pc of the total imports in Pakistan and it has been estimated that these Chinese tyres are more than 50pc-60pc under-invoiced, thus robbing the government of its legitimate dues and affecting the local tyre industry to the extent of its survival. Therefore, sources added, it was imperative to revisit the ITPs to support local industry.

They recommended that the solution is in proper documentation of the economy. “This task will be time-consuming even if proper efforts are undertaken. The country needs to have a law that makes it compulsory for all importers, manufacturers, wholesalers and retailers to start issuing proper sales invoices,” they stressed.