A proof of under-invoicing in imports

It is a collective perception that under-invoicing and under-valuing imports from United Arab Emirates are a source of leakage from the revenue collection. This is particularly in case of Dubai where Pakistani importers first land their consignments before dispatching them to the country. The damage comes in when these consignments are under-invoiced to evade taxes and duties, and hence bypass the governments tax authorities.
Pakistan Business Council has conducted an in-depth study aiming to analyse the import value discrepancies in Pakistans imports from the UAE. Its rationale for examining such malpractices lies with large differentials between UAE and world prices from one year to another without any plausible explanation or an ensuing increase in market share.
According to the study, inconsistency in prices is found in many sectors like machinery, electronic equipment, dyes, chemical agents, plastics, products made of iron and steel, cosmetics, etc. It must be noted that majority of the imports from UAE constitute crude and petroleum products; whats left makes up only around three percent of the total imports in Pakistan from the world, according to the study.
Disparities in prices reported by the study run as high as $240,000 per ton especially for products like parts of dirigibles, while more common inconsistencies ranged between $10,000 and $30,000. These numbers are alarming and should cause a significant increase in UAEs market share in Pakistans imports. But according to what PBC suggests, they lose their impact when looked at from their-share-in-total-imports perspective; interestingly, where UAE appears to have become significantly cheaper than the rest of the world, its share in Pakistans imports has actually decreased.
A fraud is a malpractice that needs to be evicted no matter how trivial it is in monetary terms. The country is losing about Rs600 billion in tax evasions, smuggling and other malpractices to circumvent the regulation. Of this around 25 percent is due to all the under-invoicing in imported goods from various countries. With a big share in total government revenue losses coming from under-invoicing and undervaluing measures in imported goods, it is important that the government takes necessary steps to control and manage outsourcing, improve technology and audit all transactions.