ISLAMABAD: In a new development to facilitate exporters, the Federal Board of Revenue (FBR) has decided to club all export promotion schemes including manufacturing bonds scheme, Duties and Tax Remission for Export (DTRE) scheme and Temporary Importation Scheme into a unified scheme from next fiscal year.
Sources told Business Recorder, here on Thursday that the FBR has circulated the draft of the new scheme to the stakeholders for comments.
One of the key features of this unified export scheme is to allow the facility of advance authorisation to exporters for importation of goods.
The exporters would be divided into three categories: Category-A; Category-B, and Category-C with sub-categories, depending on their export history.
The FBR has given the Input Output Coefficient Organization (IOCO) very important role for determining input/output ratios and production capacity of the exporters for issuance of digital "Analysis certificates".
After incorporation of necessary changes, the new scheme would be announced in the budget (2021-22).
This is for the first time that the exporters would enjoy all facilities under a unified scheme, which was earlier available under different schemes, official added.
According to the FBR, the board has undertaken the exercise for simplification of export promotion schemes by developing a unified scheme instead of manufacturing bonds scheme, the DTRE schemes under SRO 459(1)/2001, SRO 326(1) /2008, and 327(1)/2008, and temporary importation under SRO 492(1)/2009.
A draft text of the proposed scheme is being prepared for comments and observations on the scheme by May 2021.
The scope of the new scheme revealed that the facility to import goods without payment of customs duties, sales tax, federal excise duty and withholding tax shall be available to persons registered under the Sales Tax Act, 1990, as manufacturer-cum-exporter (Direct Exporters); manufacturers who act or intend to act as contracted vendors of foreign principal as toll manufacturers; commercial exporters engaged in the purchase and export of goods in the same state either after packing or otherwise; persons registered under the Sales Tax Act, 1990, as manufacturer and operating as indirect exporters or vendors for direct exporters; manufacturers including manufacturers of engineering goods who intend to supply against international tenders.
Provided this scheme shall be allowed for the export of goods authorised under the export policy order, incase of export of goods restricted or prohibited under the export policy order specific permission from the Ministry of Commerce shall be required, the FBR stated.
The FBR will allow advance authorisation to exporters to import goods under the scheme.
Advanced authorisation to import goods without payment of duty and taxes under these rules shall be granted based on export performance for last 24 months or two financial years and firm contract of export.
The applicant can apply for authorisation based on both performance and contract-based simultaneously and an applicant having multiple contracts of export may club the quantities into a single application.
Under the categorisation of exporters, for the purpose of this scheme, exporters shall be treated as per the following categories: (i) Category- A covering manufacturers/exporters with 60 percent or above exports of their total annual production in last two years; (ii) Category-B: Manufacturers/exporters with less than 60 percent total annual production being exported. This category shall be further subcategorised as under (a) Category B1: Manufacturers/exporters having more than three years of export history and (b) Category B-2: Manufacturers/exporters having less than three years export history.
(iii) Category-C covers indirect exporter and commercial exporters. Within this category, Category-C1 covers exporters having more than three years history of supplying to direct exporters or export as commercial exporter and Category-C2 covers exporters having less than three years history of supplying to direct exporters or export as commercial exporter.
The FBR said that the category A and B shall include all corporate, non-corporate large and small, and medium manufacturers cum exporters.
The exporters with a poor compliance profile, ie, having one or more contravention case adjudged or pending against them or having pending recovery cases or criminal proceeding record shall be downgraded for a period of one year.
Under the new scheme, the FBR has also specified in detail procedure for processing of the application for import authorisation.
The online application shall be assigned to the Directorate General of input output coefficient organisation (IOCO) for determination of the Input-Output ratios and assessment of production capacity of the applicant within 30 days of the receipt of the application.
The IOCO shall validate the input-output ratios declared by the exporter and may modify them according to its findings or sectoral benchmark.
The IOCO will establish a central database of all determination of input/output ratios and wastages by it as well as by EDB on a sectoral basis.
The WeBOC system will intimate the regulatory Collector about the receipt of the application by the IOCO with details of the exporter.
The Collector or an officer designated by him will conduct a profile analysis of the exporter.
On the basis of scrutiny of an application, the director IOCO, shall upload the quantities of the input goods allowed to be imported or procured locally in the WeBOC system.
The import authorisation can be issued for the maximum period as specified against each category of exporter.
The IOCO shall commence processing of the case immediately and shall not wait for the report of the Collector, rules added.
Provided that the director IOCO may block this option for applicants with poor compliance profile.
The FBR has also issued procedure for the security for Advanced Authorization. The applicant shall submit a security instrument equal to the duty and taxes being remitted on the quantity demanded along with the application, the FBR added.
Under the scheme, the FBR will determine the input-output ratios and wastages as well.