Global customs valuation system demanded to resolve trade issues

LAHORE: Pak-China Joint Chamber of Commerce and Industry (PCJCCI) has demanded the implementation of fully integrated global customs valuation system in order to curtail smuggling, over/under invoicing and other trade issues.
President PCJCCI Shah Faisal Afridi said variation in trade statistics of Chinese and Pakistani custom officials need to be addressed by the establishment of a valuation database, adding that many times the values and prices are altered through false-invoicing, over-invoicing, under-invoicing and smuggling.
He asserted that according to some official reports, around $4.4bn under invoicing is being committed in imports from China.
Establishment of a valuation database and customs modernization is inconceivable without adequate investment in information technology, Afridi said.
He explicated that over/under invoicing of exports and imports can have significant tax implications.
“An exporter, who over-invoices the value of the goods that he ships, may be able to significantly increase the value of the export tax credit or value-added tax (VAT) rebate that he receives,” he said, “Similarly, an importer who is under-invoiced for the value of the goods that he receives may be able to significantly reduce the value of the import duties or customs taxes that he pays.”
He termed both of these cases as the acute means of trade-based money laundering and abuse of the tax system.
Afridi further pointed out that thousands of industrial units have been rendered sick, due to the unavailability of smuggled goods in the open markets.
The most glaring example is Afghan Transit Trade, which is the main source of smuggling into Pakistan and its annual volume has been estimated about five to six billion dollars or about 70 percent of the total smuggling causing a revenue loss of about 2.5 to three billion dollars annually.
He warned that if the government fails to control manipulation and alteration in customs value, it will not only cause a continuous revenue loss but will also create a hostile trading environment for honest traders by distorting the market.