Latest news with #ImportPolicyOrder
Business Recorder
4 days ago
- Automotive
- Business Recorder
Used vehicles banned for commercial import: Customs Appraisement
KARACHI: Pakistan Customs Appraisement South has said that old and used vehicles are currently not permitted for commercial importation into Pakistan in terms of Appendix C of the Import Policy Order (IPO), 2022. In response to the news report published in the Daily Business Recorder on August 5, 2024, Pakistan Customs Appraisement South, in its statement, said that used vehicles are banned for commercial import under Appendix C of the Import Policy Order (IPO) 2022. However, overseas Pakistanis can import such vehicles under Personal Baggage, Transfer of Residence, or Gift Schemes as outlined in Appendix E of IPO 2022. These provisions are designed exclusively for Pakistani citizens residing abroad and not for commercial traders. The policy requires that foreign exchange for purchasing vehicles must originate from outside Pakistan, and duty and tax payments must be remitted from overseas accounts belonging to the Pakistani sender or received in their family accounts within Pakistan. It further said that declared values in Vehicle Baggage Goods Declarations serve as procedural formalities to initiate clearance and do not determine the duty assessment basis. The authority referenced a Sindh High Court judgment dated December 24, 2020, which upheld the legality of declaring indicative values for clearance purposes by overseas Pakistanis. For Asian vehicles up to 1300cc, duties are collected per SRO 577(I)/ 2005, while vehicles exceeding 1300cc are assessed under Customs General Order No. 14 of 2005 and Valuation Ruling No. 1051/2017. Final duty and tax liability are determined solely during assessment, independent of declared values. All assessments follow applicable laws and valuation procedures, asserting that no revenue loss occurs in vehicle import clearances under these schemes, Pakistan Customs Appraisement South clarification concludes. Separately, official sources in Post Clearance Audit (PCA) contested these explanations, citing a specific case where the declared value of Rs. 17,635 for a 2023 Toyota Land Cruiser was enhanced by customs to Rs. 10,049,868. Across 1,335 import declarations, declared values totalling Rs. 670 million were enhanced to Rs. 7,254 million, indicating what auditors termed 'massive under-invoicing.' They argued that Section 79 of the Customs Act legally binds all importers, including overseas Pakistanis, to file true declarations with correct import values regardless of scheme type. They questioned how a 2023 Toyota Land Cruiser could legitimately cost Rs. 17,635, noting that even iron and steel scrap of equivalent weight would exceed this amount. They raised trade-based money laundering concerns under Section 32C of the Customs Act, questioning whether the actual foreign exchange used matched the declared Rs. 17,635 or the assessed Rs. 10,049,868. They suggested acquiring foreign export documents to verify actual purchase and export values, arguing that significant discrepancies could indicate illegal financial flows through hawala or hundi systems. PCA official sources emphasized that no legal provision exempts overseas Pakistanis from declaring accurate values or differentiates between 'conventional' and 'non-conventional' commercial invoice values. They noted that the cited High Court judgment addressed contravention case framing without reference to money laundering concerns and applied only to specific petitioners, unlike Supreme Court judgments. The audit observation focused on money laundering risks from heavy under-invoicing rather than duty tax evasion, noting that under-declared import values could enable misreporting of moveable asset values in annual income tax returns. Despite customs enhancing declared values during assessment, officials said no scrutiny was conducted to address trade-based money laundering concerns as required under Section 32C and the Anti-Money Laundering Act 2010. Copyright Business Recorder, 2025
Business Recorder
4 days ago
- Business
- Business Recorder
IPO violation: FCA system clears banned goods worth Rs10.53bn
KARACHI: In violation of the Import Policy Order (IPO), the Faceless Customs Assessment (FCA), system has reportedly cleared the restricted/banned goods worth Rs10.538 billion. The audit, conducted by the Directorate General of Post Clearance Audit (PCA) between December 16, 2024, and March 15, 2025, revealed widespread violations of import regulations and massive duty evasion that had gone undetected by the FCA system, which was meant to be Pakistan's answer to customs corruption. The most alarming finding was the clearance of restricted/banned goods worth Rs. 10.538 billion through the FCA system, which was a direct violation of Import Policy Order (IPO) conditions. PCA audit report: FCA: Rs38bn revenue losses suffered in 3 months Over 1,006 Goods Declarations (GDs) involved restricted/banned goods that should never have been allowed through the old customs system, highlighting critical flaws in the FCA system. This clearance represents a fundamental breakdown of the FCA system's core function,' sources in customs said. 'The system was specifically designed to prevent such violations, but it failed,' they added. The audit also detected Rs. 5.007 billion in duty and tax evasion across just 1,524 GDs, averaging over Rs. 3.3 million in losses per declaration. More concerning was the failure to frame contravention cases as required by law, resulting in an additional Rs. 2.433 billion loss in statutory fines. The total revenue loss from these cases alone reached Rs. 7.44 billion, but the audit report suggested this may represent only the tip of the iceberg. The audit was conducted by just nine officers and this severe resource imbalance meant only 8.8 percent of total clearances could be audited, suggesting the actual scale of losses could be far greater. The audit report further said that around Rs. 30.364 billion was lost due to the non-framing of contravention cases as required under SRO 499(I)/2009. Less than 2% of high-value tax and duty-evading cases were officially booked, allowing massive revenue losses to go unpunished. The audit report also highlighted that around Rs. 60 million in duties and taxes were evaded after the cancellation of assessed and finalized GDs, and added that solar panel containers were cleared against unauthorized NTNs and Customs User IDs, raising trade-based money laundering concerns worth Rs. 643 million. The FCA system was launched last December 2024 with great fanfare as Pakistan's solution to endemic customs corruption, promising automated, transparent, and efficient trade facilitation. The system was designed to remove human discretion from customs assessment, theoretically eliminating opportunities for bribery and favoritism. However, these audit findings suggested that although the FCA may have reduced traditional corruption, it has created new vulnerabilities that are being systematically exploited on a massive scale, resulting in Rs. 38 billion revenue loss. Copyright Business Recorder, 2025
Business Recorder
5 days ago
- Business
- Business Recorder
PCA audit report: FCA: Rs38bn revenue losses suffered in 3 months
KARACHI: Pakistan's much-touted Faceless Customs Assessment (FCA) system has suffered a massive revenue loss of Rs. 38 billion during just three months of operations, casting serious doubts over this corruption-proof digital reform. This was revealed in an audit report prepared by the Directorate General of Post Clearance Audit (PCA) for the period from December 16, 2024, to March 15, 2025. The audit was conducted by just nine officers covering the entire PCA South region, compared to over 100 officers facilitating FCA clearances. This severe resource imbalance meant only 8.8 percent of total clearances could be audited, suggesting the actual scale of losses could be far greater. According to the details, the PCA, South has examined 13,140 Goods Declarations (GDs) out of 149,086 total clearances, detecting irregularities in nearly one in every five transactions they have audited. The audit revealed multiple layers of revenue haemorrhaging across different categories of violations. A staggering Rs. 7.44 billion was lost through duty and tax evasion in just 1,524 GDs, averaging over Rs. 3.3 million per declaration. Additionally, Rs. 10.538 billion worth of restricted goods were cleared in violation of Import Policy Order conditions across over 1,006 GDs involving items that should never have passed customs. The most significant loss came from the failure to frame contravention cases as required under regulations, resulting in Rs. 30.364 billion in losses, with less than 2 percent of such cases being officially booked. The reported Rs. 38 billion figure excludes an additional Rs. 23 billion in statutory fines linked to smaller-scale duty evasions, suggesting the actual losses could be substantially higher. Among the most shocking revelations was the massive under-invoicing of luxury vehicles, with discrepancies reaching 91 percent. Out of 1,335 vehicle import GDs reviewed, declarations worth Rs. 670 million were enhanced to Rs. 7.254 billion during assessment, yet even these enhanced valuations were processed without proper verification of foreign remittances. The audit specifically highlighted cases like luxury Toyota Land Cruiser imports being declared at absurdly low values, raising concerns about potential money laundering through illicit channels. The audit also flagged over 4,973 import consignments, including solar panel containers worth Rs. 23.4 billion, that remained unclaimed at ports for unusually long periods, with some delayed by over two years. These containers were cleared on unauthorised National Tax Numbers and Customs User IDs, raising trade-based money laundering concerns worth Rs. 643 million. Even goods subjected to multiple assessment stages showed faulty processing, with 313 GDs wrongly assessed despite full oversight, leading to Rs. 2.11 billion in duty evasion. An additional 58 GDs that passed through Quality Assurance still resulted in Rs. 77.2 million losses, including cases of misclassification, illegal exemptions, undervaluation, and vague goods descriptions. The audit report further said that Pakistan's customs framework has become 'heavily tilted toward blind facilitation,' allowing repeated mis-declarations and tax evasions without accountability. The report warned that limiting visibility of GD particulars under FCA has undermined assessment quality, creating a 'structural lag in the taxation framework.' The PCA South audit report also urged the authority concerned for immediate action, including reinforcing audit directorates with qualified staff, rebalancing the FCA model to restore supervisory checks, digitally flagging GDs for mandatory contravention framing, and launching forensic probes into repeated GD re-filings. Copyright Business Recorder, 2025
Express Tribune
18-07-2025
- Automotive
- Express Tribune
Suzuki warns against used vehicle imports
Listen to article The CEO of Suzuki Motor Company Pakistan met with the coordinator to the prime minister on commerce to discuss challenges facing the local automotive industry, particularly the implications of allowing used vehicle imports for commercial use. According to a statement, Suzuki representatives voiced concerns that opening Pakistan's market to imported used vehicles could lead to an influx of lower-quality cars. They warned that this could undermine customer welfare and damage the auto industry by allowing substandard vehicles to dominate the market. The Ministry of Commerce officials acknowledged the concerns and assured the delegation that appropriate safeguards would be incorporated into the forthcoming Import Policy Order.
Business Recorder
02-07-2025
- Business
- Business Recorder
Defence vehicles: MoC amends IPO to allow import, re-export
ISLAMABAD: The Ministry of Commerce (MoC) has amended the Import Policy Order 2022 to allow import and subsequent re-export of defence related vehicles/helicopters/assemblies by State-owned Defence entities and the wholly-owned commercial subsidiaries. In June 2025, the ECC had approved a proposal of Commerce Ministry on this matter on the recommendation of Special Investment Facilitation Council (SIFC). SIFC had requested Commerce Ministry to amend the Import Policy Order (IPO), 2022 to allow import and subsequent re-export of defence related vehicles/helicopters/assem-blies by State-owned Defence entities and the wholly owned commercial subsidiaries. ECC approves Rs2.63trn in supplementary grants for various ministries, divisions Meetings were held in SIFC on the request of two companies, ie, M/s Aero Solutions and M/s Margalla Heavy Industries Ltd wherein concerned Ministries/Divisions including Commerce, Defence, Defence Production, Industries & Production and Federal Board of Revenue (FBR) had supported the proposal with the objective to enhance export potential in the defence sector. According to the SRO. 118, Commerce Ministry said that in exercise of the powers conferred by sub-section (1) of section 3 of the Imports and Exports (Control) Act, 1950 (XXXIX of 1950), the Federal Government has directed that the following further amendments shall be made in the Import Policy Order, 2022, namely: - In the Order, in paragraph 5, in sub-paragraph (1) - in clause (b), after the semicolon at the end, the word 'and' shall be omitted; and (2) in clause (c), for the full stop at the end, the expression '; and' shall be substituted and thereafter, the following shall be added, namely: '(d) State-Owned Defence Production Entities (DPEs) and their wholly- owned commercial subsidiaries registered in the Export Facilitation Scheme of FBR, for manufacture, rebuild, inspection, maintenance, repair, overhaul, up gradation or value addition for the purpose of re-export only, subject to grant of NOC by Defence Production Division. In paragraph 13,- (i) in clause (b), after the word 'airlines', the words 'aviation Maintenance Repair and Overhaul (MRO) organizations of Defence Division and Defence Production Division and their commercial subsidiaries registered in the Export Facilitation Scheme of FBR' shall be inserted; (ii) in clause (q), after semicolon, the word and' shall be omitted; and (iii) in clause (r), for the full stop, the expression '; and' shall be substituted and thereafter, the following shall be added, namely:- '(s) Temporary import of used vehicles or vehicle chassis, irrespective of year of production by State-Owned Defence Production Entities (DPEs) and their wholly-owned commercial subsidiaries registered in Export Facilitation Scheme of FBR, for armouring or bulletproofing for re-export only, subject to NOC by Defence Production Division and Interior and Narcotics Control Division.'; and in Appendix-B, in Part-II, in column (4), against Serial No. 29, for the full stop at the end, a colon shall be substituted and thereafter, the following proviso shall be added, namely:- 'Provided further that, aviation MRO of State-Owned Defence Production Entities (DPEs) and their wholly-owned commercial subsidiaries registered in Export Facilitation Scheme of the FBR may also import goods for the purpose of re-export, subject to NOC by the Defence Production Division.' For the determination of the Input-Output Ratios (IORS) of defense-related technologies under the Export Facilitation Scheme (EFS), it was decided that the requirement of determination of IORS through the EDB may be waived off keeping in view the sensitivities of defense export projects, and as an alternative IORS for the defense export projects may be determined through a committee constituted by MoDP. Amendment for the same in relevant Custom Rules is already under process vide Financial & Accounting Mechanism for Pak - KSA Defence Projects and Similar Other Defence Projects Under Export Facilitation Scheme (EFS) 2021. Ministry of Defense Production (MODP) in this regard has already suggested the composition of said committee to determine the input-output. The FBR will share the said notification with all relevant stakeholders and the SIFC once notified. Copyright Business Recorder, 2025
