Establishment of EOUs, SMEs: TDAP proposes amendments in FBR draft rules

The Trade Development Authority of Pakistan (TDAP) has suggested amendments in Federal Board of Revenue's (FBR) draft rules prepared for establishment of Export Oriented Units (EOUs) in the tariff area and new temporary importation scheme for Small and Medium Enterprise (SMEs).
The TDAP noted that the FBR draft definitions 'input goods', which are importable duty free as raw material, assessors, components etc, should alo include machinery, equipment and spares as allowed duty-free to the units in Export Processing Zone (EPZ). This would be in the line with the trade policy decision.
To prevent possible misuse, FBR can put a proviso to the effect that any machinery allowed duty free to the EOUs and SMEs, may not be removed from the licensed premises except on filing bill of entry for tariff area and on payment of duties and taxes on the appraised value, which will take account of depreciation.
The 'input goods' as defined should also include 'packing materials'. These are already allowed both to EPZ units and under SRO 1065/2005 as well as DTRE scheme which is available to all exporters in the tariff area.
The FBR draft about utilisation period of input goods envisages utilisation of input goods within two years of import or local purchase. In this rule TDAP suggested flexibility that is available to EPZ units. As long as the imported inputs have been used up to produce output goods, within the two-year limit, it should not be insisted that the export is also affected within the two year period.
In the EPZ units, which TDAP seeking equation with, there is no utilisation period limit and more for actual physical exports. The FBR draft reefers to SMEs in the name of the rules to be called "Export Oriented Units and Small and Medium Enterprises (SMEs) Rules 2007" and the provision that these rules shall be applicable to units licensed as EOUs including SMEs, registered as manufacture-cum-export under the Sales Tax Act 1990 The TDAP feels that rule 2 (definitions) may also provide one for SMEs.
This definition can follow the same as enunciated in the recent SME policy approved by the former Prime Minister. This could read as "SME" means a unit registered as manufacturer-cum-exporter under Sales Tax Act 1990, which employs up to 250 persons, has a paid up capital up to Rs 25 million and has annual sales up to Rs 250 million.