FBR Announced New Scheme for Tax Free/Duty Exports

On Friday, the Federal Board of Revenue (FBR) published an Export Facilitation Scheme-2021, which allows free input/raw materials, taxes and tariffs for the export of commodities, for all categories of exporters, including producers-exportors and commercial exporters.

Here, the FBR also published on Friday the draught modifications in the 2001 Customs Rules of Procedure to S.R.O. 902(I)/2021.

Users of the Export Facilitation System-2021 shall be allowed to sell, subject to satisfaction from the regulatory collector regarding domestic reasons, up to 20 percent of the goods produced from input goods in the domestic market for payment of levable duties and taxes on the filing of a Declaration of Goods which is assessed as if goods are imported into Pakistan.

The next people subject to import, storage and purchase of input commodities authorised under these Rules and registration in the WeBOC or PSW shall be granted this new scheme: Persons registered as manufacturers of cum exporters under the Sales Tax Act of 1990, which provide value added in the production and export of goods, not less than 10%; producers acting or intending to act as contracting suppliers of the foreign principal as toll manufacturers; trade Exporters; persons enrolled under the Sales Tax Act (90), Manufacturers, including engineering products manufacturers that are intended to deliver against international bids; and Common Export House; manufactures and operations as indirect exporters;

According to the new plan the procurement of the input products is based on export performance in the past two financial years and a strong export contract, without paying duty and taxes.

In several categories the FBR was divided:

  1. Category A: Cum manufacturer exporting its complete yearly production during the past two years at 60% or above exports.
  2. Category B: Export to producers/exporting companies with a total output export of less than 60 percent annually.
  3. Category C: Indirect exporters, commercial exporters, and makers of international tolls. In addition, groups B and C were separated into subcategories.
Eligible for a category A and Cl classification before issuance of the rules shall, where appropriate, be provided that the current user of any of the export schemes issued in accordance with SRO 4500) 2001 dated 18.06.2001, Chapter XV, DTRE, SRO 327(1)2008 dated 29.03.2008, possesses good record of compliances.

The application should be made electronically to Regulatory Collector for the permission to operate under this programme.

The Regulatory Collector shall process the online application with the approved Certificate of Analysis of all existing export promotions for SRO 450(I) 2001 of 18.06.2001 Chapter XV, DTRE, SRO 327(1)2008 of the 29.03.2008 by uploading the approved value of the goods as well as the security instrument, applicable in the WeBOC/PSW system and IOCO system

The Input Output Coefficient Organization (IOCO) will provide an analysis Certificate indicating the amount of input goods necessary for the manufacturing of the single product unit, and the waste ratio, after establishing the input/output ratios of the exporter and their production capacity.

The IOCO Manager shall upload the value of the input products that the user acquires. Depending on the exporting capacity, the Director IOCO might lower the requested authorisation.

Input and output ratios and waste must be determined by the IOCO, and by EDB on a sectors-specific basis, in the core database. New guidelines also say that the Regulatory Collector should upload into the database all the authorisations given by it, without reference to IOCO.

The Regulatory Collector or the IOCO Director shall, on the basis of the examination of an application, upload the value of the input products permitted to be imported or acquired locally to WeBOC or PSW.

Category A audit should take place once in five years; category B; once in four years; category C; once in 3 years; and contract based: once in three years, FBR added.

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