FBR unearths Rs2bn evasion in edible oil sector

October 28, 2010

FBR unearths Rs2bn evasion in edible oil sector

By Shahnawaz Akhter

KARACHI: The Federal Board of Revenue (FBR) has unearthed tax evasion around Rs2 billion by the edible oil sector, which was hiding federal excise duty on local purchases in shelter of fixed duty on import regime, official sources said on Thursday.

“The evasion was detected while assessing the records of six companies of last few years,” said an official at Large Taxpayers Unit (LTU) Karachi, a revenue collecting arm of the FBR.

“In this regard a recovery notice worth Rs746 million has been sent to a foreign company,” the official said on condition not to be named.

Similar notices would be sent by next week for the recover of remaining amount, the official added.

The official said that specific tariff rate are applicable to edible oil in customs duty against advalorem rates in sales tax, therefore, there tax contribution is not matched with their imports and production during the period.

According to details companies were engaged in local purchases of edible oils and contending that the revenue body has exempted the sector from normal taxation.

The FBR through Statutory Regulatory Order (SRO) 24/ 2006 fixed the amount of one rupee per kg of federal excise duty at the import stage on edible oil and vegetable ghee and cooking oil in lieu of federal excise duty in sales tax mode payable at production or manufacturing stage of the said items.

The FBR is very much concerned about the tax potential and actual tax paid by the various sectors. Recently, the FBR initiated a study and selected 15 sectors of the economy, including the edible oil to identify the tax gap.

The revenue collection under sales tax on import stage registered marginal growth of five percent to Rs 18.71 billion in FY10 against Rs17.82 billion in the previous fiscal year. Meanwhile, it grew by 15.4 percent in FY09 when compared with Rs15.44 billion in FY08.