PTBP Web Desk
The Federal Board of Revenue (FBR) of Pakistan is set to introduce sweeping reforms to the Export Facilitation Scheme (EFS) 2021. These changes are aimed at addressing revenue leakages and enhancing the efficiency of export processes, particularly by withdrawing the EFS facility from importers of iron and steel scrap. This decision follows the approval from the Economic Coordination Committee (ECC) of the Cabinet, which recently greenlit a summary from the Revenue Division for necessary policy adjustments.
The proposed alterations in the EFS are multifaceted, designed to ensure that the benefits of the scheme are not exploited while maintaining support for compliant exporters. Here’s a breakdown of what these changes entail:
Reduction in Input Utilization Period: This adjustment aims to shorten the period within which imported inputs must be utilized in the production of exportable goods, thereby reducing the risk of misuse or hoarding of materials.
Input Authorization Based on Production Capacity/Input-Output Ratio: By aligning the authorization of inputs with actual production capabilities and ratios, the FBR seeks to ensure that only what is necessary for production is imported, minimizing excess and potential revenue leakage.
Replacement of Insurance Guarantees with Bank Guarantees: This shift to bank guarantees is expected to provide a more secure method of ensuring compliance and financial accountability, reducing the risk of default or fraudulent practices.
Vendor Facilitation Controls: Enhanced controls will be implemented to monitor and scrutinize the supply chain more effectively, ensuring that the inputs used are genuinely contributing to export outputs.
Sample Drawl for Verification: The FBR plans to draw samples of products to verify that the imported inputs are indeed used in the production of exported goods, adding an extra layer of verification to curb misreporting.
Withdrawal of EFS Facility for Iron and Steel Scrap Importers: Recognizing the misuse potential in this sector, the FBR has decided to exclude these importers from the benefits of the EFS, aiming to tighten control over a sector prone to revenue leakage.
The implementation of these reforms is contingent upon the completion of legal formalities and the final nod from the Federal Cabinet. Sources indicate that the FBR is poised to issue a draft Statutory Regulatory Order (SRO) once these conditions are met. This draft will outline the specifics of the new policy measures, providing stakeholders with clear guidelines on compliance and expectations.
These changes signal a significant shift in how export-related imports are managed in Pakistan. For compliant exporters, these measures might streamline processes by ensuring that only legitimate activities benefit from the EFS. However, for those in the iron and steel scrap import business, this could mean an adjustment to their operational strategies or seeking alternative avenues for import facilitation.
