Exporters and Importers Misdeclaring Values to Face Penalties Under New FBR Directive

The Federal Board of Revenue (FBR) has granted extraordinary powers to the Directorate General of Post Clearance Audit (PCA) to frame cases of “fiscal fraud” against importers and exporters involved in the misdeclaration of values for imported or exported goods. Under S.R.O. 1655 (I)/2025, issued by the FBR on Monday, the directorate has also been empowered to penalize exporters found guilty of misdeclaring values for the illegal transfer of funds into or out of Pakistan. According to the notification, the FBR has reorganized the functions and jurisdiction of the Directorate General of Post Clearance Audit and Internal Audit, as well as its directorates, to focus on post-release functions. Officials of the PCA and Internal Audit (IA) have been authorized to devise a National Customs Audit Strategy (NCAS), which will cover both post-clearance and internal audits. This strategy will be based on risk assessment and aligned with the objectives of customs compliance and facilitation. The PCA and IA officials will also implement a standardized, nationwide procedure for audit selection, conduct, observations, reviews, appeals, hearings, finalization, and record-keeping to ensure a transparent and accurate audit process. Feedback from audits will be shared with field formations and the Directorate of Risk Management to improve compliance management. A Data Analytics Center (DAC) will be established within the PCA-IA to leverage the expertise of technical professionals from both the public and private sectors, including data analysts, data scientists, system specialists, AI experts, and statisticians. The DAC will serve as a centralized hub for aggregating data from various sources, including internal systems such as WeBOC, PSW, valuation databases, exemption certificates, seizure records, past audit findings, and data from other government agencies like OGAs, SECP, IRS, the State Bank, and the Ministry of Commerce. It will also incorporate commercial data sources, such as market prices, shipping manifests, and global trade databases. The DAC will develop processes to clean, normalize, and standardize inconsistent data to ensure its reliability for analysis. It will build and refine statistical and machine learning models based on risk indicators to identify high-risk importers, exporters, and transactions. Using advanced techniques such as network analysis, the DAC will detect patterns indicative of misdeclaration, including undervaluation or overvaluation of goods, misclassification to attract lower duty rates, false claims of origin to benefit from trade agreements, and fraudulent refund or rebate claims. It will also conduct horizontal analyses of specific sectors (e.g., textiles, auto parts, electronics) or risk types to identify systemic non-compliance. Additionally, the DAC will oversee the use of advanced analytics software and technology to enhance the efficiency of PCA and IA operations.