Federal Tax Ombudsman Takes Action to Rectify Flaws in Mobile Phone Valuation Process

In a significant move to address concerns related to the assessment and valuation process of mobile phones, the Federal Tax Ombudsman (FTO) has stepped in, urging customs authorities to rectify these issues. The directive comes in response to a formal complaint filed against the Director General of Customs (Valuation), Karachi, highlighting discrepancies in the determination of duties and taxes for mobile phones.

The complaint prompted an evaluation by the Revenue Division Secretary, despite the complainant’s absence from hearings. The Director of the Directorate General of Customs (Valuation), Karachi, emphasized that Valuation Ruling No. 1732/2023, issued on January 23, 2023, was formulated through extensive consultations. This ruling included a recommendation for a maximum 60 percent depreciation.

During the hearings, the significance of assessing officers’ role in accurately appraising goods based on Valuation Rulings was reiterated. Although the complainant was not present, it became evident that their concerns were valid. Improper methods employed by customs authorities in assessing duties and taxes on mobile phones have led to misclassification and unjustly inflated duty rates, impacting importers financially.

Read more

A notable lack of uniformity and consistency in valuation methods used by customs officials was also highlighted. This inconsistency not only challenges principles of fairness but also erodes trust between customs authorities and importers, impacting the overall integrity of the process. To address these issues and prevent potential conflicts, the implementation of clear guidelines and standardized procedures is crucial to ensure consistent and accurate valuation practices.

Moreover, the assessment process often disregards the depreciated value of used mobile phones, resulting in unwarranted overcharging. To counteract these challenges, the Federal Board of Revenue (FBR) has put forth specific measures:

Precise Classification: The meticulous classification of mobile phones using appropriate tariff codes is recommended for accurate duties and taxes calculation.

Uniform Valuation Methods: Customs officials are advised to adopt consistent valuation methods, with deviations only permitted when evidence of misdeclaration is present.

Considering Depreciation: A fair assessment of used mobile phones, factoring in their physical condition and model, should be incorporated into the valuation process.

Read More

The Federal Tax Ombudsman’s intervention highlights the necessity for a comprehensive transformation of the mobile phone valuation process. The ultimate aim is to establish a framework that guarantees fairness, transparency, and consistency for all stakeholders involved. Effective collaboration between importers and customs authorities is paramount to successfully implementing these measures, thus enhancing the accuracy and fairness of mobile phone valuation practices.