Importers for rationalised tax on IT products

ISLAMABAD: Pakistan Computer Association (PCA) has demanded the government to rationalise sales tax on IT products in order to discourage smugglers and make a favourable environment for legal importers.
Due to extensive smuggling of IT products into the Pakistani market, not only the legal importers suffer but it also chunks out billions of rupees of revenue from government earnings.
The incidences of cross border smuggling of IT products and electronic goods is around $12billion annually putting the documented computer industry at a disadvantage as compared to illegal importers, the PCA Chairman Munawar Iqbal told The News.
He said, “Smuggling of IT products have been affecting the legal importers and also the government revenues.”
The government should fix the import trade prices (ITP) of IT products on lower side to ensure increase in the number of legitimate importers and discourage smuggling and improve revenues of the government by bringing smuggled imports into the formal regime, Iqbal said.
Heavy taxation structure on the computer industry includes one percent customs duty, 17 percent sales tax, six percent income tax and three percent additional sales tax.
Beside provincial surcharges, the overall incidence comes to over 27 percent federal taxes. On the other hand, illegal importers are paying zero taxes, creating serious disparity between the legitimate importers and illegal importers.
Chairman alleged that custom authorities are collaborating with the smugglers to bring in the smuggled goods while creating a price disparity.
He called upon the authorities to take stringent measures to nab the mafia and put their names on exit control list (ECL) to rectify the situation. These are smugglers are frequently travelling to other countries and importing products without paying taxes.
Despite government’s earlier announcement of setting up a border security force in the light of proposals by the Tax Reform Commission to prevent cross border smuggling, but no work has been done so far, while FBR is also behaving as a silent spectator.
The existing anti-smuggling force is ineffective and needs to be equipped with more personnel to strengthen its rank and file to deal with the challenge of smuggling.