Data information exchange between Pakistan, China begins

ISLAMABAD: The much-awaited Exchange of Data Information (EDI) between Pakistan and China on Wednesday operationalised under which tax authorities of both countries would share imports and exports data through connected electronic software, helping Islamabad to overcome massive under-invoicing in the range of $4 to $6 billion per annum.

One top official of FBR confirmed to The News on Wednesday that the EDI between Pakistan and China operationalized that would go a long way to detect multi-billion dollar under-invoicing going on at the cost of national exchequer. There are different figures quoted on menace of under-invoicing causing losses to the national exchequer.

Pakistan and China have been facing stalemate on exchange of data under the revised Free Trade Agreement (FTA) and Pakistan’s tax authorities demanded of China to ensure provision of EDI for resolving the concerns on account of under-invoicing.

“There is need to analyse whether the connected software possessed capability of transmutability of translating Chinese technical language into English through this placed EDI as without this facility the customs authorities will not be able to get benefits out of this shared information,” said one top official of FBR’s customs department while talking to The News here on Wednesday.

There is difference in data related to imports from China in the range of $4 billion between the two sides so there is need to devise mechanism for reconciliation of actual data related to exact level of bilateral trade between the two countries.

However, the FBR’s top official said that the tax authorities would be able to curb $1 billion under-invoicing on annual basis it would have multiplier effect on taxation as well as increasing tax collection in the range of 30 to 35 percent on account of all taxes at import stage.

The official said that when Goods of Declaration (GDs) would be filed in China it would be instantly available with Customs authorities at clearing stations so it would help customs officials to ascertain its exact value on the basis of which they could charge tax collection. It will not be possible to declare different value at different places on the same items, he added.

The Pakistan Revenue Authority Limited (PRAL), a subsidiary of the FBR, developed software in consultation with Director General Reform and Automation of Customs Pakistan and China have so far remained unable to finalise second phase of FTA mainly because of concerns expressed by the Islamabad taxation authorities and business community arguing that the increased incentives for imported tariff lines would erode industrial sector of the country and the country could become heavily dependent upon Chinese imports and our industrial base could further shrink. Now the Ministry of Commerce has been engaged to finalize revised FTA with China and it is not yet known when the progress could be achieved on this front by breaking impasse.