The Auditor General of Pakistan (AGP) has highlighted concerns over the Federal Board of Revenue’s (FBR) lack of openness during the issue of SROs providing customs duty exemptions/concessions at the import stage.
The AGP has strongly advised the FBR that the problematic SROs on the import stage be promptly withdrawn.
The procedure of issuing customs SROs providing exemptions and concessions lacks transparency and proper legal protection, according to the report of the Auditor General of Pakistan (AGP) of FBR for the audit year 2021-22.
In addition, the FBR does not provide internal monitoring reports about the goals and performance of these SROs. Consequently, it is presently difficult to calculate the cost of the usefulness of such exemptions in boosting existing and new investment, job creation, and the development of new technologies.
The AGP further argued that the issuing and implementation of a number of SROs giving exemptions and concessions exemplify the inappropriate use of discretionary powers granted to the federal government and the FBR by law.
There is no effective method of monitoring and oversight by high management to avoid the abuse of SROs in the field. AGP stated that it is evident from the audit findings of Rs 6.25 billion that customs officials do not apply for exemptions with accuracy.
The AGP has suggested that the federal government and FBR evaluate all current SROs issued under section 19 of the Customs Act of 1969 and revoke those that do not fall within the explicit authority of said provision.
It also proposed that section 18 of the Customs Act of 1969 be amended to create a clear and organised system for cutting or eliminating regulatory taxes and extra customs duties, so that SROs issued under this provision cannot be issued arbitrarily or for ulterior motives.
FBR should investigate and assign blame for the issue of SRO1455(I)/2018 under section 181 of the Customs Act 1969, which permitted the release of confiscated contraband mobile devices on payment of relevant duties and taxes without the enforcement of a zero-fine.
The FBR should improve its internal controls in its field formations to ensure that the concessionary SROs are applied solely to qualified importers and that neither eligible products nor dutiable items escape the application of levying SROs.
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