Transaction Valuation System: Pakistan’s Achievements and Challenges The Smarter the Trade- The Prosperous the Nation
Pakistan Customs plays a significant role in the economy of the country. It has a mandate to facilitate international trade on one hand but at the same time has to implement national laws including Tariffs and Import Policy. Over the years, Pakistan made strides in modernizing itself so that cost of doing business in the country is kept at minimum and at the same time, it is aligned with country’s international obligations. All business processes relating to movement of international cargo have been automated by home grown system of Pakistan Customs.
With the deployment of automated system across the country, movement of international cargo has been expedited. Currently Pakistan Customs does not examine and intervene in all transactions. Under the system of self-assessment, the authority of classification and assessment has already been shifted to the trade. Payments are also directly made by the importers on their self-assessed transactions and only then a Goods Declaration is considered as filed. Most of the clearance is allowed by the system without any human intervention. The ratio of this smooth, no-intervention transactions is gradually increasing. As the system matures, ratio of low-intervention or non-intervention will further increase. The objective of Pakistan Customs is to provide an enabling environment where all trade and transport move across frontiers seamlessly and only delinquent transactions are identified for suitable treatment after carefully analyzing nature of non-compliance and available repertoire of treatment options.
Customs Valuation is an important function of any customs administration. This become more significant for Pakistan, due to the reason that tariffs are very high on the one hand and most of tariff lines carry ad valorem duty and taxes. There are many sectors where value related non-compliance is suspected to be high. Pakistan Customs has to address this issue keeping country’s international obligations in view. Pakistan is a signatory to WTO Valuation Agreement from year 2000. The Customs Act and the Customs Rules were accordingly redrafted and enacted. Pakistan Customs accepts transaction values as customs values and collects duties and taxes accordingly. However, in case of suspicion a certain percentage of transactions are identified by the system so that Customs officers can evaluate whether declarations are in congruence with transaction values as enunciated in the Customs Act, 1969.
Whenever value related non-compliance is suspected, Pakistan Customs takes appropriate steps as provided in the law, to address the problem. Valuation controls are exercised during the process of clearance and after the goods have been cleared. If transaction is identified for assessment during the process of clearance, assessment in most of the cases is completed. However, in certain cases, where processing officer is not satisfied with the declaration, the same is forwarded for further investigation to the Valuation Department under section 81 of the Customs Act, 1969 after obtaining suitable securities.
Pakistan Customs has deployed a Risk Management System and automated system WeBoC (Web Based One Customs) in line with the international best practices allowing clearance of most of the imported and exported consignments without human intervention. RMS plays a pivotal role in aligning available resources for effective service delivery. For the purpose RMS identify transactions and entities where non-compliance is suspected to be high so that adequate resources are committed for treatment of risk. The nature of customs transactions are such that RMS, however, smart, needs to be continually re-aligned according to obtained risks and up-graded to make it more intelligent. For continual re-configuration and up-gradation certain resources, in the shape of human skill-set of officers involved in the processing of information / intelligence is required..
Due to the positive role of customs service delivery, exports and imports have dramatically increased in the country. Though the volume of imports exceed than those of exports due to a number of reasons including local consumer market needs for imported goods and competitive market due to cheap Chinese goods
In order to curb the under-valuation and under-invoicing, memorandum of association for exchange of information with Chinese customs will be very beneficial. Further Pakistan Customs has to re- model its strategy by cleansing the data base, enforcing the data exchange with friendly countries, improving sources of information and intelligence
The filed formations’ units of post release verification system, recovery module; Post-Clearance Audit controlled by Directorate of Post clearance Audit need to work in harmony with one another. Moreover, the role of Directorate of Customs Valuations keeps unique significance in detection of items prone to under invoicing. The departments have to keep sharing their information through digital portal and share the detections, recoveries on real time basis in order to curb the menace of under- invoicing.
Keeping in view the importance of digitalization and automation, Pakistan Customs need more experienced professionals in data analysis, business processors, forensic auditors, post verification officers. Here the role of the institution of Directorate General of Training and Research cannot be undermined. The Government may strengthen the old heritage customs monumental building with permanent teaching faculty of trained and highly experienced experts in business management processing, digitalization, automation, artificial intelligence data pruners and processors.
The Directorate General of Customs Training and Research may work in collaboration with Lahore University of Management Sciences or IBA Karachi to enrich the customs officers and officials in business management. It may also educate the clearing and forwarding agents, shipping agents who want to improve their acumen in their areas of interest. A few years back, some of the batches of probationary customs service officers were inculcated through Masters in Business Management from Institute of Business Administration (IBA) which had a far reaching impact on career development and service delivery but that was lator on discontinued due to reasons best known to the government.
Moreover, the government may introduce more punitive measure for voluntary non –compliant and habitual delinquents. Role of prosecution cannot be undermined in addition to severe pecuniary punishments in quasi-judicial and appellate proceedings.
Role of traders, importers and manufacturers associations is very crucial in awareness of smooth and seamless trade procedures. The role of trade bodies have increased manifold in present scenario of self assessment system in customs clearance procedures so that they can help in information sharing and curbing under valuation or mis declaration by any importer or group under-invoicing.
Media has to play a positive role in propagation of smooth and seamless trade practice of Pakistan Customs. Pakistan customs encourages exporters to maximize their exports without unnecessary procedural lapses. It may educate the trade community about new avenues in trade and business openings. [the_ad id=”31605″]