MG Motors Pakistan cleared in under-invoicing probe

ISLAMABAD: After a six-month-long investigation, Federal Board of Revenue (FBR) and its Chinese counterpart have found no evidence of under-invoicing by MG Motors in the import of its cars to Pakistan, The News has learnt.

The FBR’s Customs Wing officials in a letter dated March 4 had asked the Ministry of Commerce to direct the Pakistan Trade Mission in China to assist the board in verifying the import documents.

In its reply, the Pakistani Mission in Shanghai told the FBR it may contact the Chinese customs by email for the verification of the document.

“Pakistan's Mission in Shanghai, China, conveyed the local Shanghai Customs has informed that the FBR/Pakistan Customs may directly contact with their counterpart (Chinese Customs) for relevant verification of custom documents and invoices as the two sides have electronic verification mechanism in place,” said the statement.

The letter said that the Chinese Customs authorities were approached by FBR’s International Customs Section via emails on June 8 to verify the documents.

The tax collecting authority of the country said that on July 8 Chinese customs got back to the FBR and verified the goods declaration made by the MG Motors was valued at the right price.

It also said the importer, Javed Afridi, who brought the MG Motors in Pakistan, also shared with the FBR the “certificate from China Council for the Promotion of International Trade China Chamber of International Commerce” that was “attested" by consular attaché of the Pakistani Consulate in Shanghai.

Back in February, businessman Javed Afridi had indirectly accused the movers and shakers of the country’s automobile industry of launching a smear campaign after it was reported that the FBR was investigating the declared import value of completely built-up (CBU) units of Morris Garages (MG) vehicles imported in the country by his new venture.

“For decades, Pakistani automobile consumers have been exploited by cartels that cornered them with low quality, boring models at exorbitant prices. Plus, buyers had to pay billions of rupees to get delivery of the very vehicles the price of which they had already paid,” Afridi had said on Twitter.

“As new entrants bring in exciting new models at far lower prices, instead of competition, we expect maligning campaigns and baseless rumours. While we know that competition is an unfamiliar phenomenon in Pakistan’s automobile industry, we invite everyone to join in a fair competition to serve Pakistani consumers with a bigger and better variety of vehicles at lower prices,” he added.

Afridi’s statement came after a local daily reported that the country’s top tax authority, the Federal Board of Revenue (FBR), was investigating the KP-based businessman's new venture for allegedly under-invoicing the imported vehicles to evade taxes. According to media reports, the company imported over 500 completely built-up (CBU) units from Shanghai, China. The cars were predominantly of the MG GS model, the highest specification model.

The report said that Afridi’s company declared the customs value of each vehicle at $11,632 which may have been too low, as in other countries the same model is being sold for over $27,000.

“The under-invoicing evidence has also been shared with other line ministries and agencies for a thorough probe, as this is inflicting billions of rupees of financial loss to the national exchequer,” the report said.

With over 400 CBU units already imported, the company was accused in the report of evading over Rs1 billion in duty and taxes so far.