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November 19, 2019

Edhi Foundation struggles as it claims FBR yet to refund Rs186m


November 19, 2019

The largest welfare organisation of Pakistan, Edhi Foundation, has been facing trouble due to a disagreement with the Federal Board of Revenue (FBR) over the imposition of tax on various ambulances denoted to the foundation by oversees donors during the last two years.

The foundation believes that a notification issued by the finance ministry in 1992 makes it incumbent upon the FBR to return more than Rs186 million tax to the foundation it collected on the import of the ambulances.

In 1992, the federal finance ministry exercising its powers conferred under the Section 19 of the Customs Act, 1969, exempted the Abdul Sattar Edhi Foundation and Bilqis Edhi Foundation from the payment of custom duties for specified goods.

According to the notification, a copy of which is also available with The News, the late founder of both the foundations, philanthropist Abdul Sattar Edhi, at the time of the import of each consignment would furnish a certificate to the Customs that specified that the imported goods were meant to be used by the two foundations. As for the imports of ambulance, mobile radiological units and helicopters or aeroplanes, the foundations were supposed to inscribe their name at some prominent place on the body of each vehicle, aeroplane or helicopter before it was cleared from a Customs station.

The Edhi Foundation claims that it is the largest welfare organisation of the world in terms of its number of ambulances.

Speaking to The News, Edhi’s grandson Saad Edhi, who is also the spokesperson for the Edhi Foundation, shared that they are getting vehicles as donations from abroad since 2000, which they convert into ambulances in Pakistan as the local cost of conversion is cheap.

“We pay tax to the Customs, get the possession of vehicle and convert it into an ambulance,” he said, adding that later the Customs refunds the tax the foundation has paid to them after the inspection of the vehicle.

However, since 2017, he said, the Customs has not returned a total of Rs186 million paid in tax by the foundation. “Already due to a financial crunch in the economy, the foundation is facing issues,” Saad remarked, adding that the Customs not refunding the money has aggravated financial problems for the organisation.

The foundation imported as many as 330 minibuses from China in 2017 and 2018 and paid a total of Rs164 million in tax. The minibuses were later converted into ambulances and are being used across Pakistan but the tax paid for their import is yet to be refunded.

Likewise, 12 lifeboats were imported from China by the Edhi Foundation for which they paid Rs1.7 million in tax, but the said amount was also not refunded.

The foundation also uses mini-electric carts in its mental asylum and the Edhi Village which is spread over 65 acres. As many as 10 such carts were imported this year for which the Customs were paid Rs2.4 million that has not been refunded yet. The foundation also paid Rs17.8 million for 150 Suzuki Bolan vehicles as sales tax to the FBR in 2018 and are still expecting to get the amount back.

Currently a Land Cruiser Hardtop has been donated to the foundation from the Middle East and is not cleared by the Customs as it wants the foundation to pay Rs30.1 million for it under regulated duty and income tax.

This land cruiser, according to Saad, is supposed to be turned into an ambulance to be used in the Katcha areas in Balochistan and Sindh. “We cannot pay some Rs3 million tax, if we’re not guaranteed that it’ll be returned once the vehicle is converted into an ambulance,” he said. If the vehicle at the port is not cleared in three months, the Customs can auction it, he added.

The foundation wrote a letter to the FBR Customs Wing Islamabad for the release of their vehicle but they responded that the ministry of commerce and textile, commerce division, can take a decision over the matter.

In October this year, the foundation wrote a letter to the federal commerce secretary to allow either the release of the donated vehicle after its modification as an ambulance with exemption of taxes or its re-export to another port. “As the vehicle is incurring heavy port demurrage and container detention charges, we being a welfare institution are not in a position to pay so much big amount,” the foundation wrote.

The ministry in a letter turned down Edhi Foundation’s request for allowing the release of the vehicle and said that the facility of re-export of the imported consignment was available. However, according to Saad, in that case the foundation will have to bear the cost of re-export also.

FBR Spokesperson Dr Hamid Ateeq was not aware of the issue. “Generally, the non-profit organisations [NPO] are not taxed,” he said. There’s income tax of 16 per cent, sales tax of seven per cent and customs duty is heavily charged on vehicles, he explained. The customs duty, he said, is generally not imposed on NPOs and as for the sales tax, NPOs are not charged with it under certain conditions.

One of the Customs collectors in Karachi dealing with the Edhi Foundation’s case, on condition of anonymity, said that the import of old vehicles is not allowed under the rules. “There are only certain items for which they are allowed repayment of taxes,” the official said, adding that initially the foundation used to import brand new ambulances which were allowed. “They just need to get amendment in the FBR’s list to import old ambulances also,” the official said.