ISLAMABAD: Although the Customs authorities in March had linked customs value with London Metal Bulletin (LMB), the internationally published prices, in a bid to avoid confusion at the time of goods’ clearance at ports, the authorities have now unlinked it for unknown reasons, it emerged on Monday.
Sources have alleged that a group of influential persons in the department did not want the new system to be functional to secure their interest as the traditional system encourages misdeclaration and money laundering.
In a letter sent to the Federal Board of Revenue (FBR), the steel industry has claimed that delay in linking customs value with Internationally Published Prices (LMB) on the import and export of metals has throttled industrialisation in Pakistan as it encourages illegal businesses.
As per the letter written by Pakistan Association of Large Steel Producers (PALSP) in this regard, in the absence of international pricing systems, the menace of under-invoicing has thrived unabated.
Professional trade criminals have become well organised and strong because of delays in implementation of effective countermeasures by the federal government, the letter states, adding that forex dacoity through under-invoicing in export is parked outside Pakistan and utilised in misdeclaration of customs value on imports to evade taxes.
This laundered money is being exploited by organised criminal groups and professional money launderers to facilitate a myriad of financial flows, the letter further adds.
The association claims that Pakistan faced loss of foreign exchange of over $255 million through illegal business practices during the fiscal year 2020-2021 (FY21). As per assessment of the data, the country faced loss of Rs2 billion revenue per month.
It may be recalled that through the Finance Bill FY21, the federal government had allowed Pakistan Customs to incorporate values from internationally acclaimed publications, periodicals, bulletins or official websites of manufacturers or indenters.
On the request of PALSP, the Directorate General of Customs Valuation issued valuation rulings linking customs value with LMB for the export of copper and import of metal scrap having copper content.
London Metal Bulletin, now Fastmarkets, is an international publication that provides data in the light of transaction values between traders on import and export of metals and metal scraps. The prices published in the bulletin are market-reflective, assessing both the buy and sell side of transactions on a purely unbiased basis.
The association through valuation rulings provides a transparent platform for uniform assessment for all importers regardless of their category or sector whereas the data also helped Pakistan Customs to discover the actual composition of metal scrap and helped in effective determination of customs value.
It is pertinent to mention here that perusal of trade data shows significant improvement in collection of revenue and foreign exchange on exports.
The steel industry has requested the FBR chairman for taking immediate measures to associate customs value with international prices on import and export of all metals and metal scraps.
Pakistan imports over six million tonnes of metal scrap every year and even a small variation can cause loss of billions to the national exchequer.
