No duty, taxes on imports for exports sector from Aug 14

ISLAMABAD: The government will exempt raw material and other imports intended for manufacturing of exportable goods from duty and taxes from next month under the new export facilitation scheme, the Federal Board of Revenue (FBR) said.

The FBR issued a draft of rules for the new export facilitation scheme 2021 and called for comments from industry, exporters and other stakeholders.

The government approved the new export facilitation scheme, which will be implemented from 14th August 2021 and will run parallel with existing schemes like manufacturing bond, DTRE [duty and tax remission for exports] and export- oriented schemes for two years,” the FBR said in a statement. “The existing old schemes shall be phased out in the next two years and will be fully replaced by the export facilitation scheme-2021. Draft rules can be accessed at the official website of FBR.”

The new scheme encourages minimum documentation under Web-Based One Customs and Pakistan Single Window.

The focus of the scheme is on post clearance compliance checks and audits. Users of the scheme include exporters (manufacturers cum exporters, commercial exporters, indirect exporters), common export houses, vendors and international toll manufacturers.

“Users of the scheme shall be subject to authorization of inputs by the Collector of Customs and Director General Input Output Organization.

Inputs include all goods (imported or procured local) for manufacture of goods to be exported. These include raw materials, spare parts, components, equipment, plant and machinery,” said the FBR.

“No duty and taxes shall be levied on inputs imported by the authorised users and local supplies of inputs to the authorised users shall be zero rated.

Through this new scheme, the concept of a common export house to import raw material duty and tax free for subsequent sale to the authorized users, especially SMEs has been introduced.”

The scheme also introduces the concept of international toll manufacturing. Under the new scheme, the utilisation period has been enhanced from two years to five years depending on the profile/category of exporters.

“It is expected that export facilitation scheme 2021 shall reduce cost of doing business and cost of tax compliance, improve ease of doing business, reduce liquidity problems of exporters by eliminating sales tax refunds and duty drawback for the users of Scheme and shall attract more users and shall ultimately promote exports,” said the FBR.

“Users of the scheme will 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 Directorate of Post Clearance Audit will conduct an audit of the users.

The applicant can apply for authorization based on both performance and contract basis simultaneously. An applicant having multiple contracts of export may apply for consolidated approval for all such contracts.

Exporters will be treated in case of manufacturers cum exporters with 60 percent or above exports of their total annual production in last two years, manufacturers/exporters with less than 60 percent total annual production

being exported, manufacturers-cum-exporters having more than 3 years of export history, manufacturers-cum-exporters having less than 3 years export history and indirect exporter, commercial exporters, and international toll manufacturers.