As per a recent media report, the Federal Board of Revenue (FBR) has launched an investigation against a new entrant in the automotive industry of Pakistan. The automaker allegedly under-invoiced the customs value of one of its highly-desirable and most expensive vehicles in the lineup. The report states that the automaker is MG, and the vehicle is HS SUV.
The report adds that FBR had managed to procure the “document,” which contains the details about the import of the vehicle. The document is reportedly under the observation of the authorities. However, it has been revealed that the company had, imported 400 Completely Builtup Units (CBUs) from China, most of which were MG HS SUVs, when FBR took notice of the issue.
The report further claims that the automaker had declared the customs value of the vehicle as $11,632, which is “massively understated” since the vehicle is being sold in other countries for over $27,000. The said “document,” which contains the details of the alleged scam, has also been shared with the relevant Ministries for a detailed investigation.
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The under-invoicing scam has potentially caused billions of rupees worth of losses to the national exchequer. Having imported over 400 CBU units, the automaker has allegedly evaded over Rs 1.1 billion worth of duty and taxes to date.
The news about the said development came yesterday and understandably became an instant matter of worry for the automaker. Javed Afridi – the key-stake holder of MG Pakistan – has been fairly active on social media as of late. On the same day, Afridi took to social media to make the following statement:
For decades, Pakistani automobile consumers have been exploited by cartels that cornered them with low quality, boring models at exorbitant prices. Plus, buyers had to pay billions of rupees to get delivery of the very vehicles the price of which they had already paid. As new entrants bring in exciting new models at far lower prices, instead of competition, we expect maligning campaigns and baseless rumors. While we know that competition is an unfamiliar phenomenon in Pakistan’s automobile industry, we invite everyone to join in a fair competition to serve Pakistani consumers with a bigger and better variety of vehicles at lower prices.
The reports of the scam have sparked the interest of numerous analysts and media outlets, as they all contemplate in wonder as to what might be the future of MG after this development going forward.
Via: Business Recorder
SHAREEF BUS WAHI HAI JISKO MOUQA NAHI MILA
1 – FACT… The car is coming from the MG factory. It is given to the local company to sell so it will be given to the local company almost on cost with no profit factored in at that point. So the $11,632 figure makes sense. Where did FBR get the $27k figure? By doing a quick search on google (just type “MG HS price in China”), we get a value of around 120,000 Chinese yuan for the MG HS fully spec version. That is around $18,500. Why is FBR getting basic facts and figures wrong?
2 – FBR is so quick to pursue this case with dubious evidence at best. Yet the Mafia of the original three have been taking advantage of the Pakistani market for decades. They have prevented other companies from entering the market (before the 2016 policy). They have had a hand in preventing any local company from stating car manufacturing in the country. And most of all they are selling extremally under spec. and outdated cars in this market at extremely high prices with almost no safety features or standards followed and the minimum number of airbags. The dollar goes down yet their pricing keeps going up. What is FBR doing about them?
If you ask me, FBR is doing exactly what the old original three want. This time they can’t fight directly because of the 2016 policy so they are getting FBR to do their dirty work by making so called “legal” hurdles.
You are right sir . Pehlay inka car trailer ulat gaya . for sure the same reason of our gr8 three mafia
I didn’t search for the price and i don’t know about the fact other than that FBR may have some reason for doing that and as far as the price concern, you talked about $18500 excluding tax and duties perhaps as well. And if it is excluding these things then it could be around $27000. Anyway, FBR should go easy on MG local promoters and suppliers to ease in future productivity to capture and beat the three old scrap kings.
You are right. $27,000 is the retail price for Europe and USA. These countries have strict rules and certifications against emission control and safety regulations with extra air bags etc. So the cost for these countries is more. Whereas the Pakistani importers make every effort to get a lower price for these vehicles by stripping off extra safety features and air bags etc.
AUTO SECTOR KO TAX BENEFITS NAHI DENGE
BANGLADESH AUTO BHI LE JAEYGA PAKISTAN KA
FBR NAHI SAMAJH RAHA
This Tax Evader Afridi is the same guy who was Awarded Sitar-e-Imtiaz by Imm the Dimm recently. No wonder all the Crooks are his Buddies
Anyways He is trying to evade the criticism by blaming others and changing goalposts. The fact is that He not only evaded Taxes (as per Preliminary reports) but He misused The Greenfield Status as well. Greenfield status only allowed for a certain number of Cars to be imported and then the Automaker had to start locally producing Cars. What Afridi did was just straight up kept importing Cars for every order that MG got thus abusing the Policy.
He was only able to manipulate it cuz he’s Close to our Doofus-in-Chief Imm the Dimm. hence there was such Criminal oversight on This matter. Its not only the big three who went to FBR about MG abusing the Greenfield Status as Afridi is Implying, rather it’s basically all other new Entrants like KIA Hyndai etc who lodged a formal complain cuz it was unfair to them, as they had invested Heavily in local production while Mr Afridi, being Un-Touchable, was straight up Earning Super Profits by Just importing relentlessly. Pocketing all the rewards and not investing a penny in local Production.
Whose that imm the dimm…like your coinage…🙃
It was actually coined by Jugnu Mohsin. A very apt name for Taliban Khan aka Amraan Kaan aka Donkey Raja aka Selected not Elected
as per policy only 100 cars are allowed as CBU, how much MG has brought in 400 cards without manufacturing single unit? How come Kia and Hyundai are under fire if big 3 are playing there roles.
I my opinion, Javed Afridi, being a veteran of Chinese imported goods know how manipulate the system with matters related to import duty, although this time he would know cars are a different ball game unlike household items. Only a fool would believe that the factory car value is USD 11k only!!
Go ready the policy. It says 400 cars within a given period i think may/june 2021. Then after that upto 3 years all imported cars will have 50% import charges and after that it will be normal or 100% import charges.
Idiots read the first comment. And as far as FBR reputation goes, They think everyone is a tax evader and fraud except them.
CCP, FBR, MOIP, MOC needs to investigate the cartal by 3 manufacturer in Pakistan.
Swift in India is @ usd 8850 snd in Pakistan @ usd12300 std variant.
Same is true for other makes and models.
Import value and sale value main farak hota hy bhai.
If i am importing any goods in Paksitan, i will be paying duties and taxes on its import value not on the value that item is being sold for in the UK or any other country.
The car is being imported from China for $11k something, so duties will be paid based on the $11k something value not on the value of that product in UK (for example).
Jootay parnay chahiay hain FBR ko for this. Apni naukri nae karni aati. I know all this can be proved and cleared effortlessly by MG but FBR, dur fitay mu!
For example.
I import a car for $10,000 in Pakistan.
I pay $5,000 duties and taxes on it based on its import value i.e. $10,000.
So the final cost of the imported car for me will be $15,000.
Now, inorder to sell the car in Paksitan and earn some profit, I will not sell the car for $10,000, I will sell it for more than $15,000 after adding my profit margin.
Lets say I sell it for $20,000 with the profit of $5,000.
As I sold it for $20,000, I earned $5,000, now I will be liable to pay income tax on $5,000 profit. Its that simple.
Now in case of MG, FBR is saying that you imported the car for $10,000 but we have checked, this car is being sold for $30,000 in the UK, so you will pay duties and taxes as if you imported the car for $30,000 and not $10,000.
FBR jani, na kar masti!!
Thank you friend. That was exactly my point as well.
Also, the car is being sold in China for $18,500 for the top spec model. That makes the quoted price of around $11,000 for import into Pakistan completely believable. That means FBR is missing some facts.
If Javed Afridi is doing something wrong, throw the book at him! But if this is just political power play between companies to get the upper hand. That is bad for us as consumers.
Makes sense what you and I30 are saying. However, how do you determine that the transfer price is transparent? After all, the custom duty is charged on the basis of import value – that’s obvious. So allowing a different invoice price for the same finished good depending upon whether the importer is a consumer or company, is problematic. There has to be something in the tax laws about this
What Maqsood has mentioned below, adds that clarity
I knew it. Javed Afridi is a dubious person bringing in MG and fooling people. Thank god I didn’t opt for MG vehicles until unless MG officially launches it here rather than these people.
In every country all vehicles are sold after addition of taxes & profit. Here it is a matter that vehicle producing company in China is partner to local production of the same vehicle. Any company can give entry/introductry concessional price in new target markets to capture better share. By Law here the price is to be confirmed only from vehicle producing/exporting company in China.
Keep it up afridi…u are doing great job..we are with u ..don’t dare with three mafias…
FBR should not eye the profits of local industrialists. Let people make profit. I think fair amount of tax is being paid.
Role of thumb. Kia Sportage, hundai Tucson k mukably ki car hai or comparitively same price range me he hai, bulky thori mehngi he ha. Ub ager ye car fortuner ki price me import kerwana Chah Raha FBR to isko le ga kon? Secondly just calculated price in china wo around 37lac PKR banti hai. Ager 40 percent duty dalain to 15lac wo. Coasted around 52lac. Bat samjh aa nhi rahi k chaker Kia hai.
I did a little more quick digging (checking their Wikipedia page as well) and I think I might have found out the source for the $27,000 FBR is quoting. Turns out that the MG HS is also sold in a 2000cc Turbo variant in China. For the 2019 model year, the price for it was given as $26,320.
Just search for price of MG HS in china. You will get it in the first links if you are interested. I tried giving the link here in my comment but I couldn’t. Not allowed I guess.
However, if it is accurate, the prices of two different variants are being compared/confused. The HS in Pakistan is the 1500cc Turbo variant. FBR is quoting the price for the 2000cc Turbo one.
We seem to have a mystery on our hands here.
I think custom officers are to blame not Afridi.