FCA System Causes Rs100B Customs Revenue Loss

Pakistan’s Faceless Customs Assessment (FCA) system, introduced last year to combat corruption, has instead triggered an estimated Rs100 billion revenue loss over three months, as per Dawn citing an internal Pakistan Customs Audit report spanning December 16, 2024, to March 15, 2025.

This 161-page audit scrutinized 13,140 goods declarations (GDs), uncovering discrepancies in 2,530 cases that signal lapses in assessment quality and expose revenue and compliance risks. Among the reviewed GDs, 18% were fast-tracked via the green channel, 76% underwent scrutiny in the red channel, and 6% in the yellow channel.

The report pinpointed Rs5 billion in duty and tax evasion across 1,524 GDs, plus Rs2.43 billion in statutory fines that remain uncollected. It also flagged the clearance of restricted goods valued at Rs10.54 billion in 1,006 GDs, encompassing intellectual property violations. Failure to initiate contravention cases for GDs with duty or tax evasion exceeding Rs1 million compounded a staggering Rs30.364 billion in potential losses.

The audit exposed rampant fiscal fraud, such as cancellations of assessed or finalized GDs to dodge duties and taxes, alongside the deceitful clearance of 54 solar panel containers using unauthorized tax numbers, capitalizing on FCA system vulnerabilities.

A highlighted case involved a used Toyota Land Cruiser imported at a falsified Rs10 million value—far below its true cost—hinting at trade-based money laundering. Officials lamented that front-end facilitation under FCA, especially the green channel now handling nearly 60% of imports and 85% of exports, has undermined pre-clearance checks effectiveness.

Discrepancies encompassed misclassification of HS codes, undervaluation of goods, misuse of exemptions, and short payments of sales tax. Post-clearance audits revealed recurrent misdeclarations in repeated GD filings, enabling importers to skirt duties and fines undetected.

Moreover, the audit disclosed that 28 GDs for solar panel imports from December 2024–February 2025 were routed through different unauthorized National Tax Numbers, even as some importers had prior arrests in analogous frauds, underscoring deep systemic lapses.