ISLAMABAD: The FBR Directorate General of Intelligence and Investigation Inland Revenue (IR) Islamabad has cautioned leading international IT companies against adopting ‘business model’ used for computer hardware import to Pakistan through Dubai-based subsidiaries of local importers.
As per details, head of a global Singapore-based IT company visited Pakistan and met FBR Chairman Tariq Bajwa, Director General Directorate of I&I IR Ijaz Hussain Shah and other senior officials to discuss the case of local management of a foreign multinational company. The Tax authorities lent an ear to the company viewpoint. The visiting head informed that his company had hired a leading chartered accountant firm to plead their case in Pakistan. He said that the company had been doing business on the pattern of its competitors to provide a level playing field to all companies. He stressed that if the ‘business model’ was harmful to the Pakistan, other international companies should also be refrained from exporting hardware through subsidiaries of Pakistani importers established in Dubai.
On the occasion, the FBR chairman assured the visiting dignitary that the board would not allow any international company to adopt business model detrimental to national revenue. He assured that a uniform tax criterion would be adopted for all international IT firms. It is to be noted that Directorate General of I&I IR has already issued letters to all leading global IT exporting companies to Pakistan not to adopt business models that can cause revenue loss to the country.
The subsidiary or business model adopted by the international IT company of Singapore is that the Pakistani importer establish a subsidiary office in Dubai. The consignments meant for Pakistan has not been directly dispatched to Pakistan but landed in Dubai. The consignment of computer hardware has been dispatched from Singapore to the subsidiary office of Pakistani importer in Dubai. This subsidiary office receives the consignment in Dubai instead of direct import from Singapore to any Pakistani port. A new invoice has been prepared by Pakistani importers at Dubai to under-value goods to evade duties and taxes. The invoice has been issued by the said subsidiary office for dispatching consignment from Dubai to Pakistan. The purpose of the whole exercise is to under-value goods by importers. On the occasion, the FBR I&I chief expressed his astonishment as how international firms engaged in business transactions to the tune of billions was unaware to the practices being used by Pakistani importers to evade duties and taxes.
