Latest news with #Langrial
Express Tribune
a day ago
- Business
- Express Tribune
Faceless customs system rollout halted on flaws
Listen to article A review committee has recommended that the Federal Board of Revenue (FBR) halt the further rollout of the much-publicised Faceless Customs Assessment (FCA) system after discovering that it caused a 57% increase in container clearance time and a decline in revenue. The Review Committee on FCA also questioned the system's design, stating that it had been tested 20 years ago and later discontinued due to similar flaws. After early reports of success, Prime Minister Shehbaz Sharif travelled to Karachi in January to inaugurate the new system. The FCA was introduced to eliminate physical contact between importers and customs officers, aiming to increase revenues and speed up clearance of imported containers. "This committee does not recommend implementation of further phases or rollout of FCA unless its efficacy is confirmed through other means or with larger datasets, or its design is reviewed," the three-member committee stated in its report finalised last month. According to FBR's original plan, the second phase of the FCA was to be implemented by June 2025 at all Appraisement Collectorates, dry ports, and land border stations. The third phase, scheduled for September 2025, would extend the system to all airports and Export Collectorates. However, the committee has now advised halting the expansion due to major issues in the first phase. The FCA's implied objective was to curb collusion between importers and customs officers, which was seen as a cause of revenue loss. But the report states the system "has not achieved this objective." FBR Chairman Rashid Langrial told the National Assembly Standing Committee on Finance this week that the system was not primarily aimed at increasing revenue. The report noted that two of the FCA's basic design concepts — hiding trader information from assessing officers and ending specialised assessment groups — had already been tried and abandoned 20 years ago when Pakistan Customs' first computerised system was introduced. The reasons for their earlier failure remain valid today. The committee found that specialised assessment groups helped build sector-specific institutional memory and stronger customs controls, while also reducing clearance time through repeated handling of similar products. Langrial acknowledged the implementation problems during a meeting with the Finance Committee on Friday and said they would be resolved by next month. However, the very committee formed under his orders has recommended halting the rollout. The final report on FCA and Centralised Assessment Unit (CAU) performance was submitted to FBR management last month, in response to a review ordered by Langrial. The report revealed that in November 2024, before the FCA was implemented, the average clearance time for goods declarations was 25.6 hours. This rose steadily, peaking at 46 hours in April 2025. On average, clearance time increased 57% to 40.2 hours. "It is evident that the dwell time has significantly increased after the implementation of FCA," the report noted. Between July and November 2024 (pre-FCA), 84% of declarations were cleared within 48 hours. This dropped to 70% between December and April 2025 (post-FCA). For goods declarations that were both assessed and examined, average clearance time increased from 74 hours to 81 hoursa 10% jump. The committee also evaluated the system's impact on revenue. Under the previous system, duties collected exceeded declared values by 13% to 17%. But following FCA's introduction, duties and taxes fell. Between February and April 2025, total revenues dropped by 2% to 23% compared to prior months. "The value addition by assessing officers is reflected in the extra revenue collected," the report stated. This contribution dropped from 16% in July-November to 13% in December-April. However, the number of documents called for examination dropped from 37% to 21%. The Director General of Risk Management System and the Member Operations FBR Customs, both part of the review committee, did not respond to requests for comment. The report showed that customs officers now refer more goods declarations to senior officers after assessment. Referrals rose from 6% in the old system to 11% under FCA. Lab referrals also doubled. The WeBOC system allows traders to file reviews before principal appraisers and assistant collectors. Under FCA, such appeals increased from 6% to 14%, further delaying clearance and increasing workload. "Increased examinations, senior officer referrals, lab tests, and especially reviews have offset any time saved from reduced document calls, thereby increasing overall dwell time," the report stated. It also noted that the quality of assessments had deteriorated, as indicated by the surge in review filings. Langrial admitted that clearance times at appraisal and examination stages had risen due to the increased number of reviews filed by importers. "At the design stage, we did not anticipate the rise in reviews," he said, adding that FBR would introduce virtual hearings by assistant and deputy collectors starting July to address the issue. The new FCA system was designed to address long-standing issues in customs processes by enabling remote, technology-driven assessments and minimising physical contact through automation. During the first few weeks of FCA's implementation, the average time for container clearance had initially improved, dropping from 108 hours to 66. However, the long-term data now shows the opposite trend.
Business Recorder
a day ago
- Business
- Business Recorder
IMF nod needed for every tax-related proposal, says Langrial
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has said that the government has to obtain approval from International Monetary Fund (IMF) for every tax-related proposal including any exemption, reduction in tax rates or any changes in tax regime. During a briefing to the Senate Standing Committee on Finance and Revenue, Langrial stated that the IMF has agreed to the FBR's proposal to generate Rs389 billion through enforcement measures during next fiscal year. Langrial stated that the IMF is closely monitoring the country's tax collection performance, adding that weekly meetings would be held between FBR officials and IMF to monitor results of enforcement measures. Rs17.6trn FY26 Budget unveiled under the shadows of IMF conditions, US tariff tensions and war threat The issue came to the light when a private stakeholder raised the issue of expiry of exemption available to real estate investment trust (REIT) one year back. Chairman FBR has sought time from committee on Senators' proposals, whereas, the finance minister also endorsed the proposals of the senators. Secretary, Ministry of Commerce also briefed the Senate Standing Committee on Finance that the new policy proposes four tariff slabs (0, 5, 10, 15) designed to support local industries. Finance Minister Muhammad Aurangzeb told the committee that under the new tariff structure, import duties on raw materials and intermediate goods will be reduced in the first year. This is part of a broader industrial support package, adding he said that lower input costs will help reduce the overall cost of production. Previous governments had imposed high import duties in an attempt to curb imports, but the strategy yielded limited results in terms of long-term economic benefit, he added. Chairman FBR Langrial added that past increases in tariffs were often used to protect inactive or inefficient industrial units, which ultimately distorted market competition and discouraged innovation. The chairman of the Senate Finance Committee emphasised the urgency of bringing down production costs, particularly in comparison to regional competitors such as India and Bangladesh, where exporters enjoy significantly lower electricity tariffs. 'Pakistani exporters are burdened with high energy costs, which puts them at a disadvantage in global markets,' he remarked. Finance Minister Aurangzeb assured the committee that the government is committed to reducing the cost of doing business. Electricity rates for industries have already been lowered and interest rate is expected to drop below 10 per cent in the upcoming fiscal year. The government is also working on resolving industrial tax issues. He said that Prime Minister Shehbaz Sharif has established a dedicated committee on tariff reform, which will continue to work on long-term structural changes to make Pakistan's tariff regime more competitive and growth-oriented. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
Tobacco revenue can increase by bringing illicit trade into tax net
KARACHI: The country's annual revenue from the tobacco industry could more than double from the current Rs 270 billion, if the government succeeds in bringing the illicit cigarette trade into the tax net. This potential windfall is driving renewed calls for stricter enforcement against tax evasion and illegal tobacco sales. Industry sources said that despite holding only 46 percent of the market share, the tax-paying segment of the tobacco industry contributes a staggering 98 percent of the total revenue collected from the sector. This imbalance has raised serious concerns about the effectiveness of the current tax policy. Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has recently disclosed that tax evasion in the tobacco and poultry sectors has soared to nearly Rs 400 billion, highlighting serious flaws and enforcement gaps in Pakistan's tax collection system. Speaking during a meeting of the National Assembly's Standing Committee on Finance, Langrial, Chairman FBR also highlighted that despite efforts to combat illicit trade, the tax machinery faces severe manpower limitations. The chairman disclosed that only one out of every 10 trucks carrying smuggled cigarettes is confiscated, with most evasion going unchecked due to the insufficient capacity of the current enforcement system. Therefore, with the illicit cigarette trade now dominating more than half of Pakistan's tobacco market, experts are calling for a shift in government policy-away from repeated tax hikes and toward curbing tax evasion by non-compliant tobacco companies. As per estimates, Pakistan is currently losing an estimated Rs 415 billion annually due to tax evasion in the tobacco sector. Industry experts believed that by bringing the illicit trade into the tax net, revenue from the tobacco industry could surge from Rs 270 billion to around Rs 700 billion annually. Industry sources said that higher taxes on legal tobacco products are inadvertently benefiting illegal players. 'Every time the government raises taxes, non-compliant illicit companies exploit the situation, expanding their market share while legitimate businesses bear the brunt. Instead of repeatedly increasing tax rates, the government should prioritize bringing the illicit trade within the tax net,' they suggested. The illegal market's unchecked rise is eroding tax revenues and endangering public health, as unregulated products flood the market without control. As Pakistan continues its battle against tobacco use, the industry sources stresses that meaningful progress will require a crackdown on the shadow economy undermining both fiscal and health outcomes. Copyright Business Recorder, 2025
Express Tribune
30-01-2025
- Business
- Express Tribune
Faisal Vawda alleges FBR officials threatened to kill him over vehicle procurement
Listen to article Senator Faisal Vawda has revealed that he received death threats from Federal Board of Revenue (FBR) officers after raising concerns about the purchase of 1,010 vehicles, a matter that was discussed in a Senate Standing Committee meeting. Vawda claimed he has evidence to support these allegations. The Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwala, convened to discuss the issue of the FBR's vehicle purchase deal. During the meeting, Vawda alleged that FBR officials threatened his life when he raised the issue, stating he was prepared to provide evidence. He named several FBR officers and revealed he has compiled a list of 54 corrupt officials, which he is ready to share. FBR Chairman, Rashid Langrial, expressed his concern over the allegations, stating that as a parliamentarian, Vawda's complaint should be taken seriously. "If you received threats, I could also be at risk. This matter will not be left unchecked. It will be sent to an investigation agency for a criminal inquiry," Langrial said. Vawda urged the government to act swiftly, stating that he had encountered similar situations during his time in office and did not want the matter to be delayed. The committee also addressed the issue of FBR officers conducting a raid on a multinational company's office. Committee members, including Farooq H. Naik, stressed that this was a sensitive matter and called for a criminal investigation, suggesting the case be referred to the Federal Investigation Agency (FIA). Langrial assured the committee that a thorough inquiry would be conducted into the raid and said he would provide a complete report on the matter if they trusted him. If they preferred an investigation by another officer, he was open to that as well. Senator Shibli Faraz raised concerns about the vehicle purchases being made without competitive bidding, calling it a criminal issue that required investigation. Langrial assured the committee that the vehicle purchase process would remain on hold until all concerns were addressed. He urged that the matter not be delayed further. The issue of procurement process approval by the Public Procurement Regulatory Authority (PPRA) was also discussed. Langrial clarified that while the law did not require prior PPRA approval, the process should have been reviewed by the PPRA board. He added that the finance minister should seek detailed information from PPRA regarding the vehicle purchase. Langrial also questioned why other government departments were not categorised in the same way as FBR officers in the Integrated System, expressing frustration over the lack of consistency across the board.
Express Tribune
27-01-2025
- Business
- Express Tribune
Pakistani elite hid billions, reveals FBR chief
ISLAMABAD: In a startling disclosure, Pakistan's tax chief said on Monday that there were hardly 12 Pakistanis who declared wealth of Rs10 billion ($36 million) or more in their returns a statement that shows the collapse of the tax machinery and its inability to expand the narrow base. The Federal Board of Revenue (FBR) Chairman Rashid Langrial made the statement in his defence to stop the economic transactions like buying property, car or maintaining a bank account by ineligible persons, either filers or non-filers. "Only 12 people declared assets of more than Rs10 billion in the last year, which is a huge under declaration", Langrial told the National Assembly Standing Committee's subcommittee on the issue of proposed restrictions on the real estate sector. The meeting was chaired by Bilal Azhar Kayani, a member of the National Assembly (MNA) belonging to the Pakistan Muslim League-Nawaz (PML-N). "Only 12 people with officially declared wealth of Rs10 billion or more does not reflect the true wealth of the Pakistanis. There are hundreds of housing societies in Pakistan and many dozens around Islamabad and Rawalpindi," the FBR chairman continued. India has over 100 richest persons with net worth in billions of dollars. India's 100th richest person's worth is $3.3 billion, while its richest person Mukesh Ambani's net worth is $119.5 billion, according to the Forbes. "For the past 78 years, we have been running the country on excuses that measures to broaden the tax base can undermine the economy and it is not just the responsibility of the FBR to expand the tax base and run the system of the country," remarked the chairman FBR. Langrial stressed that economic activities should have a link with the personal wealth of the people. The government has proposed to disrupt economic transactions by people whose tax returns do not support such major purchases. There is also a proposal that only those persons can buy the property, whose declared assets can support such transactions. If the value of the declared asset is Rs100, the buyer can buy a property of up to Rs130 value, according to the proposal. The FBR should consider exempting the reconciliation of up to Rs50 million assets, which will allow the people to declare their assets, recommended Arif Habib. "The draft bill is very dangerous and it leaves the buyers and the sellers of the property at the mercy of people who are ready to exploit," he added. Habib further said that the businesses were badly affected in recent times and the people invested only in gold and dollars. What is the need for introducing a proposal to stop purchase of properties by ineligible persons when the people have the legal obligations to file their income tax returns and the wealth statements at the end of the fiscal year, remarked Kayani, the convener of the committee. In the last fiscal year, a little fewer than 1.7 million property transactions were carried out and 93.7% transactions had a value of less than Rs10 million, said Langrial. He added that there were only 2.5% transactions that would be affected by the new legislation. "Our objective is to target only 2.5% households," Langrial said. However, Ashfaq Tola, the president of the Tola Associates a tax advisory firm – warned the FBR not to disrupt the system for the sake of 41,801 or 2.5% transactions. The FBR should not bring the entire real estate sector under the clouds for these few thousands transactions, he said. Tola added that if the FBR could not handle these 41,801 people without disrupting the entire system then there was a serious question mark on the ability of the system. The FBR had shared the value-wise brief of the 1.7 million property transactions during the last year. Only 3,250 transactions having value of more than Rs50 million were declared with the property registration authorities in the last year. The actual prices are far higher than the declared values of these properties at the time of registration, said MNA Jawad Hanid Khan. The FBR should first explain the results of the powers of blocking the sim cards and disconnect the electricity and gas connections before asking for new powers, said MNA Usama Ahmed Mela. Langrial said that the taxes could not be recovered through normal means until the entire system was changed, all the officers of the FBR were honest and the civil laws were reformed. He confessed that there were thousands of people who were buying properties every year, they were filers but still did not disclose those assets in their returns. "The decision to stop property transactions by ineligible persons would open new avenues of money laundering from Pakistan," warned MNA Muhammad Mobeen Arif. Langrial replied that the FBR was conscious of the fact that the housing sector had been affected and "the FBR has a role in it". In order to reverse the trend, He added, the government was seriously considering reducing taxes on the property transactions, subject to certain approvals. Dr Hamid Atiq Sarwar, member operations of the FBR, said that during the first half of this fiscal year, 735,000 property transactions were carried out and out of which 500,000 transactions were by the non-filers. He said that post-purchase of asset audits did not help, as the success rate was only 3%. "The proposals are no more in the hands of the FBR and it is now up to the standing committee what kind of decision it takes, Langrial said. The sub-committee would meet again on Thursday to propose a way forward. It emerged during the discussion that the panel may recommend to the National Assembly that in case the property value was below Rs10 million, there should not be any requirement to first justify the source of buying the property.
