Islamabad – The Federal Tax Ombudsman (FTO) has issued a directive to the Federal Board of Revenue (FBR) to revise baggage rules in order to curb the entry of significant quantities of high-value luxury goods in collaboration with customs authorities.
In a recent move, the FTO instructed the FBR Member Customs (Policy) to address potential loopholes in the baggage rules by making appropriate amendments. Additionally, the FBR has been urged to introduce the Overseas Pakistanis Door to Door Service Rules 2024, a recommendation put forth by customs authorities.
The FTO’s investigation into the misuse of the baggage scheme revealed that high-value luxury items were being cleared from the port under the guise of baggage, with minimal duty and taxes paid, in collaboration with customs authorities. Furthermore, these goods were being cleared using the passports of overseas Pakistanis with limited incomes, causing a significant economic loss as they were distributed throughout the country.
Unaccompanied baggage of overseas Pakistani passengers is regulated by SRO 666(1)/2006, defining it as personal apparel, and other personal, professional, and household effects of a passenger. The clearance process for such baggage differs significantly from regular imports, focusing primarily on the belongings of overseas citizens falling into two broader categories: those availing the transfer facility and those not availing the transfer of residence.
The FTO emphasized the need to revise the definition of commercial quantity in Rule 2(c) of SRO 868(1)/2006, a recommendation supported by the Directorate General, Intelligence and Investigation, Customs, Karachi. The FTO also acknowledged the efforts of the Collectorate of Customs Enforcement (Ports), Karachi, in streamlining baggage clearance and preventing misuse.
In response to the FTO’s investigation, the Collectorate of Customs Enforcement (Ports) took action by lodging FIRs against individuals involved in bringing goods in commercial quantity through the misuse of the baggage scheme. The FTO noted a decrease in complaints related to malpractice in the last six months.
However, challenges remain, and the FTO has directed the FBR to instruct the Member (Customs Policy) to examine and incorporate viable changes in relevant rules, procedures, and SROs based on the proposals submitted by the Collectorate of Enforcement (Ports), Karachi, and the Directorate of Intelligence & Investigation, Karachi. This step is crucial to ensure the integrity of the baggage facility scheme and prevent further economic losses.
