FBR to renew valuation of imported goods for tax purpose

KARACHI: The Federal Board of Revenue (FBR) has decided to issue new valuation tables of imported consumer goods to determine sales tax and check mispricing, sources said on Monday.

Government, through Finance Act 2019, introduced an amendment into Sales Tax Act 1990 under which printing of retail price on imported consumer goods was made mandatory. The measure was introduced to eliminate the practice of recovering sales tax on assumed retail prices.

An official, citing an example, said difference was found very huge. For instance, a perfume price was declared Rs100 at the import stage but its retail price in the local market was Rs1,000, he said.

The law has been applicable since July 1, 2019, but the FBR relaxed the condition of printing of retail prices, subject to some conditions, due to difficulties faced by importers of such goods.

The FBR issued Sales Tax General Order on August 7, 2019 and under which retail price, if not printed at the import stage, can be printed at the port of import.

“If that is also not possible, the importer shall undertake to print the retail price after clearance of goods and shall pay sales tax on retail price, which shall not be less than 130 percent of the customs value increased by assessed customs duties, excise duty and other applicable

taxes and charges excluding sales tax,” the FBR said in a statement then.

The official at the Large Taxpayers Unit Karachi said a survey conducted by the unit found that the selling price of imported consumer items was much higher than the declared value at customs clearance stage.

The official said the survey was conducted for various consumer products falling under Third Schedule of the Sales Tax Act 1990, and a report was sent to the FBR headquarters.

The printing of retail prices is mandatory for importers on items such as tea, juices, perfumes, household electrical goods, including air conditioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, electric fans, electric irons, washing machines and telephone sets. The items also include household gas appliance, including cooking range, ovens, geysers and gas heaters. Besides, items such as foam mattresses, paints, lubricating oils, storage batteries, tyers, motor cycles and auto rickshaws have also been included in the regime of printed retail prices.

The official said the FBR decided to issue the values of imported consumer prices under the law to collect sales tax. The official further said the values would be based on survey conducted for applicable rates in the local markets.