Senate panel rejects amendment to introduce Authorised Economic Operator programme

Updated 18 Jun 2020

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Contractors and sub-contractors of the Gwadar free zone areas are being considered for duty exemptions for a period of 40 years. — AFP/File
Contractors and sub-contractors of the Gwadar free zone areas are being considered for duty exemptions for a period of 40 years. — AFP/File

ISLAMABAD: The Senate Standing Committee on Finance on Wednesday rejected three key proposals of the Finance Bill 2020 and asked Federal Board of Revenue (FBR) and Ministry of Maritime Affairs top officials to identify real beneficiaries of the proposed amendments.

The committee led by Senator Farooq Hamid Naek also gave a deadline to Maritime Affairs secretary to disclose names of contractors and sub-contractors of the Gwadar free zone areas, who are being considered for duty exemptions for a period of 40 years.

Committee members were unsatisfied with secretary’s explanations who tried to justify the exemptions. On the intervention of Senator Mohsin Aziz, the committee asked secretary to provide contractors and sub-contractors names to the committee.

The secretary was also asked to present the Gwadar port handling agreement with the Singaporean company in 2007 which was later sold to a Chinese company in 2013. “We need the copies of two original agreements,” Mr Farooq H Naek said.

He also asked the secretary to present names, details of ownership of contractors, sub-contractors, resolution of National Assembly rejecting exemption to Gwadar port free zone and ordinance copy under which tax exemptions were given.

Senator Dr Musadik Malik said there should be transparency in everything while adding that the government should not amend the original agreements to give ‘benefits’ to certain people. Senator Ms Ayesha Raza also seconded his concern and said the committee was misguided on the issue of duty exemptions to Gwadar free zone area.

“I will try my best to bring all these documents to the committee tomorrow”, maritime affairs secretary said. However, senators strongly recommended that it will be binding to disclose everything to legislators ahead of approval.

The FBR team also failed to convince the committee over the two proposed reforms to the Pakistan Customs in the budget for cross-border movement of goods under the Trade Facilitation Agreement (TFA). One of the two reforms relates to the Authorised Economic Operator (AEO) programme to be implemented before September. The AEO programme aims to facilitate secure trade supply chains through simplified procedures.

The committee unanimously rejected the amendment of the Pakistan customs. The second amendment was related to advance rulings. The deadline set for its implementation is Sept 30. This will bind Pakistan Customs to give an advance ruling at the request of a person, who intends to trade goods.

The amendment was approved by majority of the senators, however, Senator Farooq Naek recommended the FBR to include appeals clause to the final amendment. The committee also unanimously rejected the FBR amendment which says that the bundle of proof will lie on the accused. aeo The amendments that were approved related to extending the scope of smuggling, introducing higher penalties, reducing the seizures detection time of goods to 15 days, repayment of regulatory duty to exporters, the inclusion of under-invoicing in the ambit of fiscal fraud and adjudication of cases within 30 days.

Published in Dawn, June 18th, 2020