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FIA detects Rs 200b tax evasion in re-exports by 27 companies

FIA detects Rs 200b tax evasion in re-exports by 27 companies

KARACHI: The Federal Investigation Agency (FIA) has detected Rs 200 billion tax evasion scam in re-export allegedly by 27 companies, including some foreign outlets.

According to the FIA officials, the record obtained from various Customs Collectorates reveals that 125 corporate guarantees of M/s BGP (Pakistan) International have already expired but the company did not re-export the temporary imports and was liable to pay all duties and taxes as well as surcharge. However, in a historical recovery, the FIA succeeded in recovering Rs 750 million from the company.

FIR number 33/2017 was the outcome of Inquiry No. 43/2017 of FIA, ACC, Karachi, registered in this circle regarding fraudulent re-export of surveying equipment of M/s BGP (Pakistan) International, on the strength of bogus/forged documents, without paying duties and taxes. The consignment was scheduled for shipment to China on October 3, 2017 through their customs clearing agent M/s International Moving and Trading Company, which was intercepted by FIA on October 2, 2017.

After lodging of the FIR, the Country Manager Zhang Zhongmin and Deputy Country Manager Li Chonghong were arrested on November 23, 2017. During the remand period, M/s BGP Pakistan International, through their finance controller, agreed to pay the evaded revenue against 125 Corporate Guarantees.

The company got the customs clearance for shipment of surveying equipment without paying duties and taxes by misusing provision of SRO-678(I)/2004, in connivance with their clearing agent. The examination of the documents revealed that the customs authorities had cleared the goods on the basis of fake/bogus corporate guarantees. The goods meant for re-export through GD KAFE-SB-1999 dated 28.09.2017, were earlier imported in the years 2014 and 2015.

As a result of the timely action of the FIA, the customs authorities have started contravention proceedings against M/s BGP (Pakistan) International and its clearing agent on the charges of evasion of duties and taxes.

M/s BGP (Pakistan) International has been working in Pakistan since 1995 and is engaged in business with numerous oil and gas producing companies. The company imported hundreds of consignments of surveying equipment under provision of SRO-678(I) 2004 but didn’t comply with terms and regulations of SRO-678(I) 2004. The temporary imports are immune to duties and taxes subject to providing a corporate guarantee for each consignment whereby importing company indemnify that imported goods will be re-exported within two years (now five years) or completion of the project, whichever is earlier. However, M/s BGP (Pakistan) has not re-exported any temporarily imported consignment of surveying equipment so far, thus, causing serious violation of SRO-678(I) 2004.

M/s BGP (Pakistan) International fraudulently tried to re-export its surveying equipment imported in the years 2014 and 2015, on the strength of fake/bogus corporate guarantees. The consignment was detained and adjudication proceedings are underway at Customs while FIA is looking after criminal aspect of the case, which culminated into FIR No.33/2017.

In this way, total recovery made from M/s BGP Pakistan International in the instant case stands at Rs 750 million which is a result of FIA’s timely action and subsequent processing of the case. Further it led to the facts that another 27 companies committed the same crime and evaded Rs 200 billion in terms of taxes and duties.

Three companies out of 27 have agreed to pay the evaded amount while the proceedings against others are still underway.