Govt proposes amendments to Customs Act

VIAMubarak Zeb Khan

ISLAMABAD: The government has proposed new amendments in the Customs Act to control trade mis-invoicing used for transfer of funds across borders based on the false declaration of price, quantity or quality on an invoice.

In this regard, a new section 32C was proposed in the customs Act 1969.

It has been observed that it is one of the mechanisms used for trade-based money laundering.


As per details, trade mis-invoicing may include overstatement of value of imported goods, understatement of value of exported goods or vice versa.

However, all such possible scenarios of trade mis-invoicing are not expressly covered under the provisions of the Section 32 of the Act.

Also Read: Significance of Fifth Schedule of Customs Act

After the introduction of the new amendment, Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has ordered to identify the extent of mis-invoicing in export declarations in order to ascertain the suspected items or sectors and destination for such mis-declarations.

Moreover, it has also been decided to categorise exporters on the basis of risk profiling by segregating compliant exporters from those engaged in mis-invoicing.

One of the Financial Action Task Force’s major recommendations for the Pakistan Customs is to effectively deal with currency smuggling, a source of trade-based money laundering and terror financing, particularly at entry and exit points of the country and to install a system for tracking the money trail.

An official statement said the customs operation wing based at FBR has tasked the director general customs valuation to submit a report in this regard.

The directorate was further directed to develop a risk based system to intercept this trend without compromising export facilitation. It is worth mentioning that punitive action will be taken against unscrupulous exporters under the proposed Section 32 C of the Customs Act.

According to the statement, this initiative has come on the back of reports indicating mis-invoicing in exports, which includes under-invoicing resulting in loss of remittance of foreign exchange and over-invoicing used to transfer excessive funds abroad.

One of the suspected methods used in under-invoicing in exports is through the medium of port cargo.

Export cargo are misdeclaration by under-invoicing the values of export commodities, and shipped via port where in new declaration with actual values are re-shipped for final destination.

As a consequence, lesser amount of foreign exchange is remitted to Pakistan and a major portion of export proceeds is retained in the other country.

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In order to penalise the officers and taxpayers who are involved in commission or omission of an act for personal benefits and undue advantage, a new Section 156A is proposed in the Customs Act, which makes both the officers and the taxpayer liable for criminal proceedings in such cases.

Published in Dawn, June 14th, 2019

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