Category: Business

Caretaker Federal Minister for Finance Dr Shamshad Akhtar and FBR Chairman Malik Amjed Zubair Tiwana Saturday visited Overseas Investors Chamber of Commerce and Industry (OICCI) and Korangi Association of Trade and Industry (KATI) in Karachi and held meeting with their representatives.

The meeting was also attended by all chief commissioners-IR and Chief Collectors Customs heading their respective field formations stationed in Karachi.

The representatives of OICCI and KATI acknowledged the efforts of FBR field formations in taxpayers’ facilitation and revenue mobilization while also highlighting the issues like complicated tax compliance, over regulation, absence of documentation at cottage industry level, narrow tax base, non-filers, transit trade and IT glitches faced by exporters. The minister explained measures current government has undertaken to stabilize economy and to ensure optimum revenue collection.

During the meeting, the FBR chairman discussed issues raised by representatives of both bodies and assured them that their concerns will be addressed instantly. He also emphasized on recent important initiatives taken by FBR like designating 50 percent of RTOs workforce for Broadening of Tax Base, Track and Trace System and crackdown on non-duty paid goods.

The minister and FBR chairman also visited LTO, Karachi and held meeting with Chief Commissioner-IR, Chief Collectors Customs and Commissioners-IR. During the meeting, the minister appreciated FBR field formations for exceeding collection target during the first quarter of the current financial year and directed CCIRs to continue making endeavors to meet the budgetary target fixed for the year.

Source: Pro Pakistani

Customs Intelligence has filed a case before the Special Judge (Customs Taxation and Anti-Smuggling) against famous Muhammad Hanif Jewani, a famous builder and developer, on the allegations of money laundering.

According to a document, Customs Intelligence Karachi has made a unique case of money laundering of over Rs. 3 billion involving placement, mingling, layering of proceeds of crime and its integration in the economy.

Owners/directors/partners of a Group of Companies were involved in conspiring and then carrying out placement, parking and integrating proceeds of crime in a residential project known as “HSJ Icon” under the umbrella of a group entity/company “HSJ Construction”, which upon initial enquiry, was found to be neither registered with the Federal Board of Revenue (FBR) and nor is a tax-filer.

Therefore, it was in reality HSJ Builders and Developers which has launched and is constructing the said building. HSJ Builders and Developers is a firm/Association of Persons comprising of accused persons Muhammad Hanif Jewani and Ahmed Hanif Jewani, father and son respectively, who during preliminary investigation were found involved in the commission of, inter alia, predicate offence under Section 32 of the Customs Act 1969 punishable under clause (14) of Section 156(1) of the Act ibid.

It surfaced during initial enquiry that the aforesaid predicate offence had been committed by the accused persons through use of another company HSJ Metals Pvt. Ltd. which was involved in illegal removal of 14,392 MT of Iron and Steel waste and scrap and Silico-Manganese from the Private Bonded Warehouse Super Highway, Nooriabad.

As a result of stocktaking, only 3,761.89 metric tons plus approximately remaining stock of 700 to 1,000 metric tons were found available instead of balance quantity of 18,854 metric tons as on 20-03-2023, thereby establishing that directors of importer/licensee had unlawfully removed 14,392 metric tons of in-bonded goods valued at Rs. 2.17 billion without payment of duty/taxes to the tune of Rs. 716 million.

Proceedings were accordingly initiated for violation of the Customs Act, 1969 and Sections 3, 6, 33 and 34 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, on account of which subsequently under Order-in-Original N0. 33,023 dated 02-05-2023. The liability of the importer/licensee was held at Rs. 716 million in terms of evasion of duty/taxes along with default/additional surcharge to be calculated at the time of actual payment and personal penalty of Rs. 10 million.

That resultant recovery proceedings initiated under section 202 of Customs Act 1969 for Rs. 1.38 billion as of 30-06-2023 did not succeed due to the fact that the bank accounts of HSJ Metals Pvt. Ltd. had no funds whatsoever available in the said bank accounts.

It is reported that right up-to the time when the wrong-doing of the accused persons surfaced, they had been manufacturing Steel Bars which were sold in the market as well as used in the construction of HSJ Icon.

In this manner, the accused persons, other than using the Steel Bars made from non-duty/taxes paid Waste Scrap and Silico Manganese, also diverted the funds obtained from the sale of illegally manufactured Steel Bars towards the construction of HSJ Icon.

It is accordingly established that the accused persons are involved in the offence of money laundering by using the “proceeds of crime” by way of developing and progressing the project HSJ Icon from the funds of HSJ Metals Pvt. Ltd which should have been paid in the government exchequer, while at the same time receiving monies from the allottees of flats and shops in the project thus layering the scam in an organized manner.

The facts revolving around being such that the same individuals operating and managing two sister entities, one of which is involved in generation of proceeds of crime and the other in placement and integration of such proceeds, through an unregistered and non-filer entity as an intermediary, the case falls within the ambit of the provisions of the Anti-Money Laundering Act, 2010.

Accordingly, the modus operandi mentioned as above resulted in money-laundering to the tune of Rs. 3.5 billion (evaded duty/taxes of Rs. 716 million, surcharge (calculated up-to 30-06-2023) of Rs. 665 million and Goods Value of Rs. 2.17 billion) by Muhammad Hanif Jewani and Ahmed Hanif Jewani of HSJ Metals Pvt. Ltd, HSJ Construction and HSJ Builders and Developers, through commission of, inter alia, the predicate offence in terms of Section 32 of the Customs Act 1969 punishable under clause Section 56 of Customs Act. 1969 within the meaning of Sections 3 and 4 of the Anti-Money Laundering Act, 2010 read with Section-VI(e) of its First Schedule.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) has constituted special groups of senior tax officials for the restructuring of Pakistan Revenue Automation Limited (PRAL) to get rid of over-staffing and cut unnecessary expenditures.

In this connection, the FBR has issued a notification on the constitution of sub-groups for restructuring and revitalization of PRAL.

In pursuance of a consultative meeting held for “Restructuring and Revitalization of PRAL,” it was decided that sub-groups comprising FBR officers shall be constituted who would share proposals for restructuring and revitalization of PRAL.

Two subgroups have been constituted in this regard. The Sub-group I for rationalization/right-sizing of PRAL Human Resources and Sub-group II for restructuring of PRAL’s Expenditure.

Under the terms of the reference (TORs) of the Sub-group-I, it will assess the existing workforce of PRAL and the current workforce structure, including skill sets, roles, and responsibilities, and identify areas where workforce right-sizing is required and give recommendations.

The sub-group will also identify any overstaffing or understaffing issues and assess the alignment of the workforce with the company’s strategic objectives.

The Sub-group (II) has been set up for restructuring PRAL’s expenditure. The TORs of Sub-group (II) included reviewing the revenue and expenditure of the company and assessing their alignment with the company’s strategic objectives and financial stability. The sub-group will also identify expenditures that are not in line with the functions assigned to PRAL.

It will evaluate whether the current pay structure of the employees in various groups is commensurate with their roles and responsibilities.

The sub-group will give recommendations for improvement in the fiscal management of the company to ensure optimal allocation of resources for guaranteeing financial stability.

In addition to the mentioned TORs, both sub-groups shall also recommend changes to be made in the Service Level Agreement (SLA) for the current financial year and the remaining payment of the SLA between PRAL and FBR for the previous year.

Both sub-groups will share recommendations regarding all aspects to the office of Chairman FBR within 15 days of issuance of this notification.

Source: Pro Pakistani

Directorate General of Customs Valuation Karachi has revised customs values on the import of PVC Electric Insulation Tape from China/Hong Kong/ Vietnam, Korea/Taiwan/UAE, Canada/Europe, and Japan.

Earlier, the Customs values of PVC Electric Tape were determined under Section 25A of the Customs Act, 1969 vide Valuation Ruling No.1589/2022. However, different stakeholders requested to determine Customs values afresh in line with values prevalent in the international market. Therefore, an exercise has been undertaken by this Directorate to determine the same.

The new ruling of the directorate revealed that a meeting was convened which was attended by all the relevant stakeholders. The issues pertaining to the valuation of subject goods were deliberated upon in detail in the aforementioned meeting. The stakeholders submitted their proposals and the same were considered pertaining to the valuation of subject goods.

The importers contended that the Customs values of subject goods are in line with the prevailing international prices. They also promised to submit copies of Sales tax invoices to substantiate their claim, but they failed to submit the same. In addition to these proposals, Ninety (90) days’ clearance data has also been retrieved and the same has been scrutinized.

The Customs values as specified have been determined after duly accounting for the aspect of tare weights regarding spools/ wrapping etc. At the assessment stage, no further allowance is admissible on any account, the ruling added.

Source: Pro Pakistani

Large Taxpayers’ Offices (LTOs) have shifted to a Zone-based system where each Inland Revenue tax official is responsible for dealing with all matters of the taxpayer including assessment, audit, legal, and recovery.

Earlier, specialized work was being done under the functional-based system where each tax official was dealing with special work like Legal or Audit Assessment of the taxpayer.

However, the tax official dealing in assessment has no clue about the audit or other legal matters of the same taxpayer. Under the functional-based system, the tax official dealing with the matters of Legal is not required to check recovery or audit issues.

The changed system has enabled the officials of the LTOs to exclusively deal with specific sectors and all issues of the taxpayers falling within the category of that sector.

Sources told ProPakistani that now the tax officials of the LTOs are more focused on all functions of the taxpayers in a specific sector.

It seems that the FBR has almost restored the old “Circle-based system” and abolished the existing “Functional-based system”. However, the FBR has used the words “Zones” instead of “Circle”.

In a report, the FBR said that the abolished “Circle-based system” was much better than the reformed “Functional-based system” operating in field formations of Inland Revenue (Large Taxpayer Units and Regional Tax Offices).

The FBR report stated that in terms of the work process structure, initially there was a Circle-based system, under which, each Circle was responsible for closely monitoring the performance of all taxpayers falling within its territorial jurisdiction.

The officer incharge was entrusted with all the responsibilities of maintenance of records, receipt, and enforcement of income tax returns/statements, conducting audit and assessment, recovery of taxes, filing of appeals at various appellate fora, issuance of refunds, and assisting the Commissioner in the issuance of exemption certificates.

Since all the work was the responsibility of one person, there was a unity of command, a better understanding of issues, and a sense of ownership among the tax officials, the report said.

In 2000, it became Functional-based, in which there was a lack of ownership and officers did not know anything outside their function.

The system has now introduced a “composite system” broadly similar to the comprising work units, the jurisdiction of which is by and large based on “territorial” specifications, and the work is entrusted to one person. Hence IRS is organized along tax instruments, territorial jurisdictions, and taxpayer segments (e.g. Large Taxpayer Offices) rather than functions, for instance, taxpayer registration, assessment, and tax audit.

This aspect of the organization may be explored further through consultations as it has implications for the efficiency of work processes and would impact the reform agenda of the reform project, the report added.

Source: Pro Pakistani