FBR constitutes team to check smuggled oil

KARACHI: The Federal Board of Revenue (FBR) has launched monitoring of oil marketing companies (OMCs) through a special team to curb use of smuggled petroleum products, sources said on Friday.

The sources said the tax authorities identified linkages of some OMCs with sales of smuggled petroleum products.

The FBR constituted a 10-member team of Inland Revenue officials belonging to different tax offices based in Karachi to launch the drive.

FBR said the team of IR officials will counter smuggling of petroleum products jointly with the team of customs officers, which would separately be constituted.

Sources in Regional Tax Office (RTO) said customs intelligence and investigation was authorised to conduct anti-smuggling operations.

Customs intelligence, however, have limitations in conducting monitoring and audits of stocks maintained by depots of OMCs.

They said the major OMCs are registered with Large Taxpayers Unit and RTOs in Karachi.

Besides, these tax offices have also data of sales by refineries.

The RTO official said the FBR already obtained data of imports of crude oil from customs authorities and refineries. Similar exercise has been done in case of import of finished petroleum products by OMCs and their subsequent sales to distributors or other OMCs.

Likewise, the sources added the data of throughput by refiners were obtained to match with sales of OMCs.

During the past few months, the customs intelligence had taken large scale operations and recovered Iranian oil smuggled into Pakistan and also arrested number of persons.

Customs authorities doubted that registered OMCs in Pakistan were also facilitating such smuggled petroleum products.

The collection of duty and taxes from petroleum products were the largest contributors in overall revenue collection.

The FBR collected Rs238.03 billion as sales tax domestic, Rs264.2 billion as sales tax imports and Rs70 billion from customs duty.

Oil sales are already decreasing, affecting revenue collection.

Oil sales sharply fell 32 percent to 9.2 million tons during the first half of the current fiscal year of 2018/19 as the government’s shift to alternative fuel for power generation brought furnace oil off-take down.

Furnace oil sales steeply declined 67 percent to 1.5 million tons in the July-December period over the corresponding period a year earlier.

The sources said the FBR is undertaking monitoring exercise after discovery of four billion rupees in undisclosed income by an executive of an OMC.

Directors of various OMCs were also under investigation on suspicion of money laundering, they added.