ISLAMABAD: The government will exempt raw materials and other imports for manufacturing exportable products from duties and taxes starting next month under the new export facilitation program, the Federal Revenue Council (FBR) said.
The RBF released draft rules for the new 2021 Export Facilitation Program and solicited comments from industry, exporters and other stakeholders.
The government has approved the new Export Facilitation Program, which will be implemented from August 14, 2021 and will run alongside existing programs such as Manufacturing Bonds, DTRE [duty and tax remission for exports] and export-oriented programs for two years, ”the RBF said in a statement. “The old existing regimes will be phased out over the next two years and will be fully replaced by the Export Facilitation Regime-2021. The provisional rules can be viewed on the official FBR website.
The new system encourages minimal documentation under the web-based Single Window and Pakistani Single Window.
The program focuses on post-clearance compliance checks and audits. Users of the program include exporters (manufacturers and exporters, commercial exporters, indirect exporters), joint export houses, vendors and international contract manufacturers.
“The users of the regime are subject to the authorization of inputs by the customs collector and the director general of the organization of inputs and outputs.
Inputs include all goods (imported or purchased locally) for the manufacture of goods for export. These include raw materials, spare parts, components, equipment, plant and machinery, ”said FBR.
“No duty or tax will be levied on inputs imported by Authorized Users and local supplies of inputs to Authorized Users will be zero-rated.
Through this new regime, the concept of a joint export house to import raw materials duty-free and tax-free for further sale to authorized users, especially SMEs, was introduced.
The scheme also introduces the concept of international contract manufacturing. Under the new regime, the period of use has been reduced from two to five years depending on the profile / category of exporters.
“The 2021 Export Facilitation Program is expected to reduce the cost of doing business and the cost of tax compliance, improve the ease of doing business, reduce liquidity problems for exporters by eliminating sales tax refunds and drawbacks for users of the program and attracts more users and will ultimately promote exports, ”said FBR.
“Users of the program will be allowed to sell up to 20% of products made from inputs on the domestic market against payment of the duties and taxes due when filing a goods declaration which will be assessed as if the goods were imported into Pakistan. in this condition, subject to the regulatory collector’s satisfaction with the reasons for the domestic sale. The a posteriori control department will carry out a user audit.
The applicant can apply for authorization on the basis of both performance and contract. An applicant with more than one export contract can request consolidated approval for all of those contracts.
Exporters will be treated in the case of manufacturers and exporters with 60 percent or more of their total annual production in the past two years, manufacturers / exporters with less than 60 percent of total annual production
being exported, manufacturer-exporters with more than 3 years of export history, manufacturer-exporters with less than 3 years of export history and indirect exporter, commercial exporters and international contract manufacturers.