Duty-Free Shops evade Rs783m in taxes
Parvaiz Ishfaq RanaMay 23, 2010
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KARACHI, May 22 The customs authorities detected evasion of duty and taxes to the tune of Rs783 million committed by four duty free shops operating in major cities of the country.
The directorate general of Post-clearance Audit on conducting audit of duty free shops found out that flagrant violations of rules were made by them causing colossal loss to the national exchequer.
The two duty free shops located in the city caused a revenue loss of around Rs680 million and that of Lahore and Sambrial Rs103 million to the national kitty.
The post-clearance audit of the shops revealed that bulk of the duty free goods imported by these entities were sold in the open market causing loss of revenue.
In most cases these duty free outlets have been found to be operating as agents for market traders importing high duty consumer goods such as cigarettes, bicycles, soft drinks, and diapers etc for sale in the open market.
The audit of duty free outlets at Lahore and Sambrial found them involved in irregularities at the preliminary stage of audit, and in-depth probe was made to look into the issue, whereby two comprehensive audit reports have been compiled showing evasion to the extent of Rs88.571 million made by Lahore duty free shop and Rs14.362 million by the Sambrial outlet.
Some of the major irregularities committed by these two shops through evasion and misuse of duty-free facility at massive a scale, included fake invoices, suppression of sales value, removal of goods in commercial quantities, sales of goods in open market, manipulation of financial and tax record, non-deposit of foreign exchange, and sales beyond admissible allowances.
However, the two duty free shops located at Karachi — EDF Ltd and DFSL-- surpassed all records of corruption in evasion of duty and taxes causing a revenue loss of Rs380 million, says an official post-audit report.
The report disclosed that EDF (Pvt) Ltd, in blatant violation of warehousing procedure, directly sold 90 consignments consisting of 102 containers of consumer goods in the open market without bringing the said consignments to their warehouse, causing a loss of Rs380 million in revenue.
The report further disclosed that fake and forged passports were used by both the duty free shops at Karachi for selling goods to market traders instead to the bona fide passengers from their city outlets as confirmed by immigration authorities causing an estimated loss of revenue to the tune of Rs300 million.
In the light of these irregularities the PCA has suggested to the Federal Board of Revenue (FBR) to entirely review the duty free shops regime so that such leakages and loopholes are plugged. It has been also recommended to limit the operations of duty free shops within the premises of the airport lounges.