Karachi: The declared Customs Values should be confirmed as of the port of origin from where the goods are shipped through data exchange between the customs agencies, a proposal of foreign investors to the Federal Board of Revenue (FBR).
The fixation of value is measure through which the mis-declaration by importers can be discouraged. A procedure may be adopted to assess goods not on the declared value but on a standard value e.g. tea is assessed on Reuters Price rather than on value declared by importer, and values access should be given to all interested parties to the custom record, foreign investors urged the FBR.
Another proposal to the FBR that penalties for under-invoicing to be made more stringent, as under-invoicing by traders remain a big concern for all manufacturers.
In past, the Pakistan Custom Services has made arrangement to share information with Chinese Customs Authority. The objective was to ensure that goods imported from China into Pakistan should be valued on the basis of information available with Chinese Customs Officials. In this regard, third party verification will help the appraisement department of Customs in assessing the fair value of goods imported.
The foreign investors also said that the Commissioner may in respect of any transaction between persons who are associates, distribute, apportion or allocate income, deductions or tax credits between the persons, as is necessary, to reflect the income that the persons would have realized in an arm’s length transaction, according to the Income Tax Ordinance 2001.
In such adjustment, the Commissioner may determine the source of income and the nature of any payment or loss as revenue, capital or otherwise. However, the authority does not take into account the values of goods determined by the custom under Section 25 of the Custom Act, 1969. Eventually, more than one valuation for the same imported goods included: one at the customs stage and another at the time of income tax assessment resulted in different bases for calculation of various government levies.
Another proposal from foreign investor to the FBR, the value determined under the Customs Act, 1969 should be used as the basis for valuing imported goods by the Commissioner of Income tax. This would ensure consistency in the determination of imported goods value for the tax payer and avoid dual taxation on the same transaction.
There must be check on counterfeit products to curb the menace of under-invoicing because Pakistan does not offer any substantial protection to its manufacturing/industrial sector and specially the industry which deals in international brands.
An investor proposed an idea that unauthorized imports of counterfeit products should be effectively checked through registration of brands with the customs authorities in coordination with the original brand owner/registered in Pakistan.
This will increase import duties and stop import of counterfeit products. It may be noted that these sectors do not contribute anything towards direct tax except for advance income tax at imports.