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FBR to investigate MG Motors under-invoicing scandal

The orders were issued to the Board on Tuesday in a meeting between the officials of the FBR and the Public Accounts Committee. The committee demanded a report within a month.

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On Saturday, the Federal Board of Revenue was instructed by the Public Accounts Committee to restart the investigation into the MG car import scandal. As per the local media, the automaker allegedly under-invoiced the import value of its Completely Built-Up Units (CBUs) and was engaged in tax fraud. The issue was first investigated in 2021 when the automotive marque was only a new entrant into the Pakistani automobile market.

As per the reports at the time, the new entrant was under-invoicing one of its top seller, the MG HS. At the time, it was being reported that the Federal Board of Revenue had managed to procure “documents” and that the company had significantly understated the customs value of the vehicle, which was priced at $11,632 in Pakistan.

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In contrast, in the rest of the world, the same was priced at over $27,000. When the investigation was initiated, by that time, the Chinese automotive company had already imported 400 units, and some estimated that the alleged scam potentially cost billions of rupees to the national treasury. After the rumors surfaced, Javed Afridi – a key stakeholder of MG Pakistan – took to Twitter and said, “As new entrants bring in exciting new models at far lower prices, instead of competition, we expect maligning campaigns and baseless rumors.”

He further added that “While we know that competition is an unfamiliar phenomenon in Pakistan’s automobile industry, we invite everyone to join in a fair competition to serve Pakistani consumers with a bigger and better variety of vehicles at lower prices.” While the Federal Board of Revenue closed the case after confirming that the reports were false, it has been ordered by the new government to further probe the matter. The orders were issued to the Board on Tuesday in a meeting between the officials of the FBR and the Public Accounts Committee. The committee demanded a report within a month.

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Last year MG was also accused of fraud by its customers. Amidst facing delivery delays, several customers came forth claiming that until they paid Own-Money, the company kept delaying the delivery. Following the allegations, the automotive company came along and blamed the delays in delivery on the shortage of semiconductor chips. The company wrote, “One historic challenge of serious shortage of semiconductor chips is being faced by the global automotive industry right now. This is beyond anyone’s control and deliveries are being delayed for all brands.”

MG is expected to begin full-scale assembly of its vehicles in Pakistan.