The MG saga

MG’s under invoicing case has been opened up once again. But to what end?

It was back in February 2021, more than a year ago, that Javed Afridi’s Morrison Garages (MG) Motors found themselves in the headlines in an under-invoicing scam. Now, the Public Accounts Committee (PAC) has ordered a reopening of the tax evasion case against the company. 

Under question are Rs 8 billion worth of custom duty which MG has allegedly evaded through the practice of under-invoicing. While it is a common occurrence in Pakistan’s imports sector, it is rare in major industries that have regulations like automobiles. 

The accusation against MG is that they failed to reveal a joint venture agreement between them and a company in China that provides them with their vehicles – even though under the law they are supposed to. Sources have told Profit that MG had used government contacts, corrupt officials in the customs department as well as members of former Prime Minister Imran Khan’s staff to get the matter hushed up. However now, after the arrival of the Sharif administration, the inquiry is being opened up again. 

Profit spoke with MG’s chief in Pakistan, Javed Afridi, over the allegations. Afridi told Profit that the company was being misrepresented and that no under invoicing had taken place. As of now, under the instruction of PAC, the FBR has formed a four member investigation committee to conduct a probe. The committee will take a detailed look at the comparable prices of Completely Built Units and Completely Knocked Down units of MG cars and determine the fair value that should have been established by the custom authorities. Further, the committee is also directed to investigate the role of FBR’s field operations in the matter.

 

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Ahtasam Ahmad
The author works as a Sector Analyst at Profit and can be reached at [email protected]

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