For tax evasion, exports underinvoiced by 50pc

KABUL (Pajhwok): The government loses hundreds of millions of afghanis in revenue every year as the private sector undervalues exports, Pajhwok Afghan News has reliably learnt.

Afghanistan’s main exports included carpets, precious stones, saffron, fresh and dried fruits, vegetables natural plants and handicrafts. Exact export statistics remain unknown, nonetheless.

An investigative report by Pajhwok Afghan News in 2014 indicated the private sector underinvoiced exporting by 79 percent in order to evade taxes. As a result, the government lost billions of afghanis over the last four years.

However, no action has been taken so far to resolve this problem despite the 2014 Pajhwok report being based on incontrovertible evidence.

The Ministry of Commerce and Industry (MoCI) says Afghanistan’s exports stood at $6.6 billion and imports at $720 million in 2017.

On the other hand, a credible source revealed statistics obtained from other countries put the value of Afghanistan’s exports at around $1.2 billion. The exports were undervalued by 40 percent.

For his part, the deputy head of the Afghanistan Chamber of Commerce and Industry (ACCI) said: “In fact, our exports were estimated at $1.5 billion in last fiscal year.”

Khan Jan Alkozai added: “According to the figures we have and the rates offered by the Customs Department, our exports stood at $720 million.

“It means the exports were $600 million less compared to previous years. It means the goods were undervalued by 50 percent,” he continued.

Given these statistics and details given in the 2014 Pajhwok report, the export items were on average undervalued by 55 percent over the last 12 years.

In response to the question why traders hide the real value of goods, Alokozai said: “Unfortunately the main problem lies in the system, which is very complex, vulnerable and riddled with corruption.”

Traders could not submit their balance for six months or a year, because they were asked for bribes and harassed on different pretexts. Subsequently, they were forced to underinvoice their goods, he argued.

He said the problem would linger on if corruption was not eliminated in customs and the administration system and tax balance dues not simplified.

Abdul Habib Zadran, general revenue director at (MoF) said that 148 million afghanis was collected from exports worth of $720 million last fiscal year.

Considering to the statistics provided by Zadran and ACCI, the government could collect around 300 million in revenue from exports last year if the goods were not undervalued.

Without going into details, Zadran said that collection of 148 million afghanis was less because the government exempted taxes on some goods over the last three years and exporters paid only 20 percent of clear tax.

The ACCI and Export Promotion Agency (EPA) had previously suggested that tax on exports should reduce by at least 50 percent for prevention of wrong statistics.

They said that the government should end corruption in customs and simplify administration processes.

Zadran confirmed the goods undervalue issue and corruption in the country customs and said the MoF had tried for resolving the problem in the last three years.

He said that tax exemption on some goods, simplification of administrative processes, installing electronic systems in customs, employing professional figures and implementation of punish and award program were efforts for reforms in the customs over the last three years.

The MoF works on a plan to know the real value of exporting and importing goods by connecting with other customs online, he said.

Zadran stressed on combating corruption and said the phenomenon was existed in all government organs for years and its complete elimination needed efforts and time.

However, Taj Mohammad Akbar, an economy lecturer in Kabul University, believe that no steps have taken for fighting corruption, particularly in the country customs.

The tax evasion issue is ongoing from long years and the reason behind it is the connection of some traders with government officials, he said.

If there was really serious efforts for fighting corruption, this problem could had been solved over that last one and half a decade, he said.

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