ISLAMABAD, July 5: Pakistan's customs has yet to develop an effective deterrence for checking rampant fake invoicing and tax frauds, causing a revenue loss to the tune of Rs20-25 billion annually to the national exchequer owing to partial implementation of the WTO agreement on customs valuation.

Although Pakistan made the new GATT Code of valuation on January 1, 2000 as part of the Pakistan Customs Act 1969, which deals with the bona fide trade, it was yet to be implemented in its true letter and spirit, thus leaving a room for unscrupulous importers to evade taxes.

Well-placed sources told Dawn that due to non-implementation of the WTO transaction value of goods, Pakistan was losing a revenue of Rs5-7 billion annually, an amount of Rs12-15 billion due to under-invoicing from China and the rest was due to under-invoicing of goods of Indian origin coming through Dubai and other destinations.

The sources said customs officials had so far failed to conduct post-importation audits, or develop an effective mechanism against trade defence measures or prepare the reference value guide and fixing of minimum value during the last six years.

Similarly, the CBR also failed in providing adequate computerisation of functions of the customs valuation department along with post-clearance audit during the period under review. Member Customs Shahid Rahim Shaikh said the system would be fully implemented from the next fiscal year. However, the member was not clear how CBR could prolong the implementation of a decision which was already part of the act for the last six years.

It was observed that the occasional discrepancy in valuation of identical goods cleared from north and south cities of Pakistan was another area of concern for traders. According to them, there had been instances where identical goods cleared from Karachi were assessed at a value different than at Lahore due to lack of networking among collectorates.In reply to a query, the member said it was wrong that difference of value was recorded at various collectorates. He also denied the impression that there were some differences among the customs senior brass on the implementation of the new system.

The sources, however, maintained that the appointment of a junior customs official of BPS-20 on the post of BPS-21 as member custom was one of the irritants in the implementation of the system.

This lukewarm response of the CBR towards the establishment of an effective valuation department has resulted in massive duty evasion in the last few years. Although the government had established a separate valuation department at the CBR in November 2004, it was yet to be fully staffed and equipped to deal with issues like under-invoicing, over-invoicing, commercial frauds and smuggling of goods causing losses to the national kitty every year. Any report in this regard was yet to be made public, the sources added.

According to them, to check fake invoicing in Pakistan, the CBR would have to introduce effectively the concept of post-clearance audit allowed for speedier clearance of goods, with the audit being performed subsequently at the importer's premises.