ISLAMABAD: The Federal Board of Revenue’s (FBR) recent crackdown on non-tax-paying jewellers has triggered fresh debate in the industry, with traders insisting that the real obstacle is not tax evasion but the government’s own policy on gold imports.
FBR has stepped up inspections, sealing shops and targeting jewellers accused of hiding income or avoiding taxes. While the tax authority says jewellers underreport sales, industry leaders argue that they cannot document transactions because the State Bank of Pakistan (SBP) has, for more than a decade, refused to allocate foreign exchange for gold imports.
A senior jewellery exporter, who also supplies to Gulf markets, told this correspondent: “The FBR says we don’t show sales, but how can we? Gold cannot be imported legally because the State Bank does not give foreign exchange. If we can’t import bullion, we can’t issue invoices for sales. This is not tax evasion, it’s a structural problem created by the government itself.”
He added that jewellers have been demanding a legal import mechanism for years. “Every other sector gets forex from the SBP when opening letters of credit. For gold, the central bank has categorically refused. When supply itself is undocumented, invoices cannot be issued and taxes cannot be properly collected. If the government allowed controlled gold imports, everything would be documented, and the FBR would automatically get more revenue.”
The exporter also revealed that previous governments had considered a limited quota system allowing up to five tonnes of gold imports annually under official supervision but the proposal was never implemented. He argued that this mechanism would not only help document the jewellery trade but also boost Pakistan’s jewellery exports, which remain far below potential due to lack of raw material availability.
The stalemate has left the sector in limbo. Jewellers maintain that they are willing to pay taxes and pass the burden on to customers, but without legal supply chains they are forced into informality. “Nobody is saying we won’t pay. The government will get revenue, but first it must give us legal imports. Otherwise, this cycle of raids and accusations will never end,” the senior exporter said.
Industry insiders warn that the ongoing standoff risks pushing more jewellers underground and could even drive skilled artisans out of work if the government fails to resolve the import issue.
