FBR Announces New Scheme for Duty/Tax Free Exports

The Federal Board of Revenue (FBR) on Friday issued the Export Facilitation Scheme-2021 for all categories of exporters, including manufacturers-cum-exporters and commercial exporters, allowing duties and taxes free inputs/raw materials for goods to be exported.

The FBR also issued S.R.O. 902(I)/2021 here on Friday to issue draft of certain further amendments in the Customs Rules, 2001.

The user of the Export Facilitation Scheme-2021 shall be allowed to sell up to 20 percent of the output goods manufactured from input goods in the domestic market on payment of leviable duty and taxes on filing of a Goods Declaration, which shall be assessed as if goods are imported into Pakistan in that condition, subject to satisfaction of the Regulatory Collector regarding reasons for domestic sale.

The new scheme shall be available to the following persons subject to authorization of import, warehouse and purchase of input goods under these rules and registration in the WeBOC or PSW: Persons registered under the Sales Tax Act, 1990, as manufacturer cum exporter, who make value-addition in the manufacture and export of goods, which shall not be less than ten per cent; manufacturers who act or intend to act as contracted vendors of foreign principal as toll manufacturers; Commercial exporters; persons registered under the Sales Tax Act, 1990, as manufacturer and operating as indirect exporters; manufacturers including manufacturers of engineering goods who intend to supply against international tenders; and Common Export House.

Under the new scheme, the acquisition of input goods without payment of duty and taxes shall be granted based on: export performance for last two financial years and firm contract of export.

The FBR has been divided into different categories:

i. Category A: Manufacturers cum exporters with 60% or above exports of their total annual production in last two years.

ii. Category B: Manufacturers/exporters with less than 60% total annual production being exported.

iii. Category C: Indirect exporter, Commercial exporters, and International Toll manufacturers. The categories B and C have also been divided into subcategories.

All existing users of any of export schemes issued under SRO 4500) 2001 dated 18.06.2001 Chapter XV, DTRE, SRO 327(1)2008, dated 29.03.2008, before issuance of these rules shall be eligible to be classified under Category A and Cl as they case may be, provided they have a good compliance record.

The application for authorization to operate under this scheme shall be submitted online to the Regulatory Collector.

The online application along with approved Analysis Certificate of all existing users of export promotion schemes under SRO 450(I) 2001, dated 18.06.2001 Chapter XV, DTRE, SRO 327(1)2008 dated 29.03.2008, shall be processed by the Regulatory Collector by uploading the approved value of the input goods along with the details of the security instrument as applicable in the WeBOC/PSW system and IOCO database after satisfying himself regarding the compliance profile of the applicant and the value of the input goods being commensurate with performance and production capacity of the applicant within seven days of its receipt.

The Input Output Coefficient Organization (IOCO) after determining the Input/output ratios and production capacity of the exporter will issue an “Analysis certificate”, showing quantities of input goods required for the manufacture of the one unit of output goods and the ratio of wastages.

The Director IOCO shall upload the value of input goods to be acquired by the user. The Director IOCO may reduce the demanded authorization according to the production capacity of the exporter.

The IOCO shall establish a central database of all determination of input or output ratios and wastages by it, as well as by EDB on a sectoral basis. The Regulatory Collector shall also upload all authorizations granted by him in the database without referring the case to IOCO, new rules said.

On the basis of scrutiny of an application, Regulatory Collector or Director IOCO shall upload the value of the input goods allowed to be imported or procured locally in the WeBOC or PSW system.

The Directorate of Post Clearance Audit shall conduct an audit of the users as under Category A; once in five years; Category B; once in four years; Category C; once in three years ; and contract based: once in three years, FBR added.

Source: Pro Pakistani