Revenue collection: IR Services to lesson role of Customs Wing

The role of FBR Customs Wing in overall revenue collection would significantly lessen with the introduction of the Inland Revenue (IR) Services, as 90 percent of the total revenue has been collected through IR.
Sources told Business Recorder here on Thursday that the issue of customs duty collection came under discussion in the last Chief Commissioner Inland Revenue conference. FBR Chairman Salman Siddiq informed the Chief Commissioners of the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) that with the inception of the IR Services the role of the FBR Customs Department in the overall revenue collection would continue to decline, as more than 90 percent of the FBR revenue collection comes through Inland Revenue Service, FBR Chairman added.
During July-February (2010-11), the Federal Board of Revenue (FBR) has provisionally collected Rs 108.376 billion as customs duty against Rs 95.400 billion in the same period last fiscal, reflecting an increase of 13.6 percent. The monthly collection of February 2011 revealed that the collection of customs duty was Rs 13.939 billion in February 2011 against the target of Rs 16 billion.
The FBR is mostly relying on the dutiable imports and any stoppage of clearance of imported items will have direct impact on the collection of customs duty. The tax base for the purpose of customs duty is primarily based on dutiable imports, which in turn depends upon the over all national and international economic conditions. Any increase or decrease in the volume of dutiable imports is subsequently reflected in revenue collected under the "HEAD" of Customs Duty. In recent past, factors like nation-wide floods, law and order situation, (particularly the strikes in Karachi) resulting in repeated closures of economic activity, and severe energy crises, have greatly affected customs revenue collection.
Moreover, as the revival and growth in the industry and promotion of exports warrant exemptions and concessions which further eroded the customs duty base already narrowed by gradual/regular customs tariff rationalisation which effectively means reduction in duty rates, sources said.