FBR asked to control Smuggling

September 22, 2023

The Ministry of Commerce (MoC) has urged the Federal Board of Revenue (FBR) to implement stricter measures to curb the rising smuggling of goods imported by Afghanistan in transit through Pakistan. To address this issue, the MoC has proposed several measures.

Firstly, the MoC has suggested that FBR require a Revolving Insurance Guarantee for all Afghan Transit goods. This guarantee would be replaced by an FBR-issued Bank Guarantee equivalent to 100% of the assessed value.

Secondly, FBR is advised to impose a processing fee equivalent to 10% ad valorem on Afghan Transit goods that show an unjustified increase in forward transit cargo (Anne-A). This move is justified due to Afghanistan’s negligible Customs Duties on these goods.

Discussions on this matter have taken place in recent meetings at the Ministry of Commerce, where data and recommendations from the FBR were presented. These recommendations were also shared with the Apex Committee of SIFC on September 8, 2023.

The surge in Afghan Transit Trade volume via Pakistan during FY23, increasing by 67% to $6.71 billion from $4.016 billion in FY22, has raised concerns about the trade deficit. This sharp increase in imports into Afghanistan appears disproportionate, given its limited exports and funding sources, especially considering the sanctions imposed on the interim Afghan government.

Analysis reveals that the growth in major import items transiting via Pakistan, such as fabrics, tires, black tea, home appliances, and toiletries, is partly due to Pakistan’s imposition of import restrictions on non-essential and luxury goods during the same period.