A nationwide audit of customs-bonded warehouses is now underway after Prime Minister Shehbaz Sharif intervened, following an alleged manipulation of in-bond and out-bond rules by a private company. The directive, issued during a weekly review meeting, mandates an independent three-year third-party audit by the Federal Board of Revenue (FBR), signaling a crackdown on irregularities in facilities that store goods post-customs clearance. Main Developments The Prime Minister's Secretariat announced that Shehbaz has reviewed existing rules governing bonded warehouses, which are privately operated and hold goods after customs clearance. He stressed there is no room for irregularities, warning that officials found involved in illegal activity will face strict legal action. Physical stock verification of all customs-bonded warehouses will be conducted nationwide, alongside measures to strengthen licensing, security, valuation testing, and IT systems. The meeting also covered inland-revenue enforcement, with petroleum cargo monitoring now linked to the WeBOC system, and bonded trade accounting for 16.5 per cent of total imports. Read also: Pakistan Auto Sales Jump 79% in July on New Launches In a separate directive, the prime minister accelerated FBR reforms, instructing the chairman and senior officers to spend two days monthly in Karachi and Lahore to intensify enforcement and meet revenue targets. He also ordered continued action against smuggling and tax evasion, praising recent operations against illegal cigarette factories in Chakwal and Swabi. Background The audit follows an incident where a private company allegedly manipulated in-bond and out-bond rules for temporary gains, which was investigated and resolved. Bonded warehouses are critical to Pakistan's trade infrastructure, storing imported goods before duty is paid, making them vulnerable to abuse. Shehbaz's emphasis on integrity includes appointing officers of good repute to sensitive posts, reflecting broader concerns about corruption in tax administration. The faceless Inland Revenue system, a key digitisation reform, was also discussed, with its first phase set to go live on October 1. Why It Matters Bonded warehouses handle a significant share of imports, so lapses can lead to substantial revenue losses. The audit aims to restore business confidence, which the prime minister says is growing, and to ensure compliance with tax laws. The faceless system, using AI and technology, will allocate tax cases randomly, reducing human discretion and potential corruption. This aligns with broader efforts to modernise revenue collection, critical for Pakistan's fiscal stability. What's Next The FBR will implement the three-year audit and complete physical stock verification nationwide. The faceless Inland Revenue system's first phase becomes operational on October 1, with full rollout targeted by 2027. Officers will begin their monthly visits to Karachi and Lahore, and enforcement against illegal activities, such as cigarette manufacturing, is expected to continue. The outcomes of the audit and reform pace will be closely watched by the business community.