ISLAMABAD: As the menace of under-invoicing is causing a loss of over Rs150 billion per annum to the country, the IT sector imports have topped the list in this regard with over 46pc under-invoicing.
Under-invoicing could be simply defined as “stating the price of a good on an invoice as being less than the one actually paid to the supplier”. It occurs if the importer and/or exporter “wishes to save on a tariff/duty” or if a buyer and/or seller wishes to “understate their apparent profits” so as to pay less in taxes.
“During the last five years, under-invoicing in the IT sector has caused a loss of Rs3.70 billion to the national exchequer,” officials of the Federal Board of Revenue (FBR) informed Senate Standing Committee on Commerce on Thursday.
The committee meeting was chaired by Senator Mirza Muhammad Afridi.
Additional Secretary Commerce Tariq Huda claimed that cases against those involved in under-invoicing were pending at the Sindh High Court. He informed that at least 35 million mobile phone sets were being smuggled into the country every year.
“Surprisingly, smuggling of oil from Iran has also increased with annual estimated smuggling worth $2 billion,” he stated. “Another major item being smuggled into Pakistan was tyres from the porous borders.”
According to the commerce ministry officials, the Ministry of Interior was tasked to take appropriate action against smuggling.
They said details of who sent dollars abroad illegally through money laundering have been sought from the Financial Monitoring Unit of the State Bank of Pakistan, adding that the ministry would be sending the cases of under-invoicing to courts by March 2020.
Earlier, the committee was informed that FBR has detected under-invoicing on 17 goods imported from abroad. The watchdog is also preparing to approach a court of law against importers who allegedly imported over $10 million worth IT goods from abroad.
It was informed that the banking channels were being monitored to detect what procedures they adopted to transfer money abroad and to check whether the procedure comes under the money laundering crime.
FBR’s Jawad Awais Agha informed the meeting that as many as 17 importers were importing IT good through under-invoicing. He said following the reports in this regard, the department has approached manufacturers for confirmation, adding that a letter has also been dispatched to Singapore High Commission for this purpose.
Meanwhile, Senator Shibli Faraz censured the relevant officials for their poor performance and non-seriousness towards matters of national interest.
He observed that FBR, Customs and other relevant departments’ officials performed poorly, pointing out the no audit could be conducted by the departments so far. Responding to Shibli Faraz, FBR and Custom Intelligence officials informed the meeting that they received the audit report of Custom on January 8, 2020.
