Lahore, August 06, 2015 (PPI-OT):“The Trade statistics variation shown by Pakistan and Chinese customs authorities needs to be addressed by the implementation of transparent, coherent and fully integrated global customs valuation system with a strict check on over and under-invoicing” it was stated by President Pak-China Joint Chamber of Commerce and Industry, Shah Faisal Afridi in a press statement issued here today.
He said that Values and prices are altered through false-invoicing, over-invoicing, under-invoicing and smuggling. He informed that according to some official reports some $4.4bn under invoicing is being committed in imports from China. Afridi, said that under-invoicing not only deprive the state of huge revenues but the practice also hurts the domestic industries, which are denied level-playing field due to under-invoiced products, he said adding that this practice should be monitored with strong political will.
He asserted that establishment of a valuation database and customs modernization is inconceivable without adequate investment in information technology. Enormous amount of data requires to be analyzed and compared with the declared values, which can only be done by employing adequate computing resources, said Afridi. It is imperative that a customs administration wanting to tackle large value mis-declaration be adequately equipped with necessary computer hardware and software, he added.
He explicated that over- and under-invoicing of exports and imports can have significant tax implications. An exporter, who over-invoices the value of the goods that he ships, may be able to significantly increase the value of the export tax credit (or value-added tax (VAT) rebate) that he receives. Similarly, an importer who is under-invoiced for the value of the goods that he receives may be able to significantly reduce the value of the import duties (or customs taxes) that he pays. Faisal Afridi termed both of these cases as the acute means of trade-based money laundering and abuse of the tax system.
He further pointed out that thousands of industrial units have been rendered sick, due to the availability of smuggled goods in open markets. The most glaring example is Afghan Transit Trade which is the main source of smuggling into Pakistan and its annual volume has been estimated about five to six billion dollars, about 70% of the total smuggling causing a revenue loss of about 2.5 to 3 billion dollars annually.
He suggested number of practical steps to be taken to improve the capacity of national authorities to address the threat of trade-based money laundering, which include the training programs to better identify trade-based money laundering techniques, effective information sharing among competent authorities at the national level, and greater recourses to memoranda of understanding and mutual assistance agreements to strengthen international cooperation.
He pointed out that if the government fails to control manipulation and alteration in customs value, it will not only cause a continuous revenue loss but would also create a hostile trading environment for honest traders by distorting the market.
For more information, contact:
Wardah Ali Gohar
Pakistan China Joint Chamber of Commerce and Industry (PCJCCI)
Mega Tower, 309 – 6th Floor,
Main Boulevard, Gulberg II,
Lahore, Punjab – Pakistan
Tel: +92-42-35777460-02, +92-42-37032203, +92-42-35874353