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Customs Today exposes mega scam: SRB admits sales tax recoverable from Maersk with worldwide $149.407b sales

Customs Today exposes mega scam: SRB admits sales tax recoverable from Maersk with worldwide $149.407b sales

KARACHI: Customs Today exposed mega sales tax scam of M/s Maersk Pakistan (Pvt) Ltd and now Sindh Revenue Board (SRB) also confirmed it would recover evaded sales tax from the company after completion of audit. Maersk Line provided $149.407 billion (around Rs 20,170 billion) worth of services provided to clients across the world during last 6 years but subsidiary of the company in Pakistan, M/s Maersk Pakistan is evading sales tax on services provided to its local clients worth billions.

Sources said the Maersk Line earned almost $ 149407 million (or $149.407 billion) in six years including $27117 million earned in year 2012, $26196 million in 2013, $27351 million in 2014, $23729 million in 2015, $20715 million in 2016 and earned $24299 million in year 2017 and paid $76.67 million sales tax in 2017.

According to available data from Sindh Revenue Board (SRB) sources, Maersk Pakistan was registered with the SRB in 2011 but not submitting sales tax according to the set rules. According to a document of Sindh Revenue Board named Working Tariff (amended up to 4th December, 2017), the shipping lines are bound to pay at least 13% sales tax on services as mentioned in table which is also available on its official website http://www.srb.gos.pk/contents/Downloads/20171204007_WORKING_TARIFF_AMENDED_2017.pdf

Sources claim that total tax evasion of Maersk Pakistan is equal to the amount of package Pakistan requires from the IMF for bailout. As talks enter the final phase, the International Monetary Fund (IMF) has set even stricter conditions for Pakistan to implement in exchange for a bailout package – much needed for economic revival. Some of the major conditions include imposition of more taxes worth Rs150 billion, further reduction in the rupee value as well as a tighter monetary policy. Centre for Investigative Journalism (CIJ) had appealed to the Supreme Court of Pakistan to probe Maersk mega sales tax scam as if the apex court only recovers evaded amount from Maersk Pakistan, the country could avoid stricter bailout packages from the IMF.

Relevant quarters say that Commissioner II of the Sindh Revenue Board was bound by the Notification No. 3-4/20/2017 to collect sales tax on services from the shipping lines as mentioned in point 15 of the table which is also available on the official website of Sindh Revenue Board http://www.srb.gos.pk/contents/Notifications/SRB-3-4.20.2017.PDF

It is pertinent to mention here that Pakistan’s biggest ever fraud of sales tax is exposed by Customs Today where M/s Maersk Pakistan (Pvt) Ltd has evaded billions of rupees sales tax in terms of services provided to its local clients. After Customs Today unearthed this mega scam of sales tax, Chairman Sindh Revenue Board (SRB) Khalid Mehmood decided to conduct audit of Maersk shipping company.

According to details, Customs Today first published a story on October 29, 2018 titled “Pakistan’s biggest ever Sales Tax fraud: NAB, FIA asked to probe Maersk, SRB connivance” in which it was exposed that Maersk Pakistan is issuing ‘benaami’ bills without sales tax numbers, without publishing its own name on the bills and giving its sales tax numbers. As per its modus operandi, Maersk sends emails in the name of Helen De Isidero to its clients whereas it is actually sent by Mr. Maqsud through Pakistan email ID pk.import@maersk.com. Maersk Pakistan employees themselves claim that Helen works in their Manila office while the email is sent from Pakistan office.

Furthermore, in the story it was revealed that all services are provided in Pakistan through Pakistan company M/s Maersk Pakistan Pvt. Ltd. but the company tries to show that services are provided by foreign company and their employees through using dummy names. When service provided in Pakistan by Pakistan office and Pakistan employees then how can sales tax on such service remain unpaid? This obviously is a fraud to evade huge sales tax liabilities.

Talking with Customs Today, Chairman SRB Khalid Mehmood confirmed, “We have received information that some shipping companies are not paying sales taxes and are involved in tax evasion including Maersk”.

He said, “After receiving such complaints we have decided to conduct audit of these shipping companies and Maersk shipping company is also included in our list”.

Khalid Mehmood said, “Maersk Pakistan is registered with Sindh Revenue Board since 2011 but now this company is in our radar and we are receiving credible information that Maersk is not paying sales tax so we have decided to obtain data of Maersk and start audit from tax year 2011-12”.

Khalid Mehmood mentioned that the Sindh High Court had barred collection of sales tax on services but later on the Supreme Court of Pakistan declared that verdict null and void. “The SRB will take action across the board against anyone found involved in tax evasion,” he asserted.

Commissioner Operations Sindh Revenue Board (SRB) Mohammad Amir said that stern action would be taken against M/s Maersk Pakistan (Pvt) Ltd after completion of audit by the Board as it is found that the company ‘evaded’ sales tax on services worth billions of rupees.

Talking exclusively with Customs Today, Amir said that the Board will definitely issue a show cause notice to Maersk Pakistan after completion of audit. It is a common practice that the Board cancels license of tax evading companies as it has already cancelled licenses of 84 companies after completing all legal formalities. If a company does not pay sales tax after issuance of notice, then the Board starts process to cancel its license.

The Commissioner Operation SRB further said that Maersk Pakistan is registered with the Board since 2011, after media exposed the tax evasion by the company and the Board received several complaints in this regard, finally it is decided to scrutinize all the record of the company of last 7-8 years because the company is not paying taxes according to its actual income. He said that there are complaints that the company is also involved in benami bills scandal.

It is pertinent to mention here that Centre for Investigative Journalism (CIJ) appealed to the Supreme Court of Pakistan to intervene and investigate connivance of Maersk and Sindh Revenue Board in the alleged mega scandal.

Meanwhile, within hours after a section of media exposed the biggest ever sales tax scam of Maersk lines, Danish Ambassador to Pakistan His Excellency Rolf Holmboe made a hotline contact and urgently met with Minister for Maritime Affairs Ali Haider Zaidi to pressurise him to in turn put pressure on local media to stop exposing Maersk Pakistan Pvt. Ltd. Maersk Line went up to such an extent that they even sent to a media house posts and photos of the Danish Ambassador having an emergency meeting with Ali Haider Zaidi so as to silence the media house instead of asking their company to abide by local laws and pay taxes according to law.