LAHORE: The Federal Board of Revenue (FBR) has received a big blow from the stakeholders who have rejected outright the proposed unified scheme which aims at amalgamation of manufacturing bonds scheme, Duties, and Tax Remission for Export (DTRE) scheme, and Temporary Importation Scheme.
According to sources, the stakeholders have pointed out to the Board in writing that the requirement of prior authorizations and approvals from Customs authorities before making any imports would add to the bureaucratic hurdles. Also, they have pointed out that no procedure has been laid down for zero-rated procurement of locally produced inputs. Besides, advance approvals of input-output ratios have once again been incorporated in the proposed scheme, which was done away with earlier.
They have further stressed the point that the purpose of merging multiple schemes was to simplify the procedures, to facilitate both direct and indirect exporters, and to cover the whole value-added chain with the intent to upsurge exports. However, the Board has failed to achieve these objectives, as the DTRE-centric scheme does not suit large stakeholders as well as those having composite units with multiple processes. The scheme does not fulfil the long outstanding demand of covering the whole chain and smooth transfer of goods from one unit to another. Stakeholders have also stressed that there is a need to make the procedure user-friendly and more practicable to relieve them from red-tapism, official intricacies, and legal margins.
Reliable Board sources said all the stakeholders have suggested a revised draft of the scheme after mutual consultation, not only the FBR but also to the Ministry of Commerce as well as the National Tariff Commission.
A copy of the revised draft obtained by the Business Recorder suggests that the stakeholders have suggested the Board to let them import the input goods without payment of customs duty, sales tax, federal excise duty and income tax after declaring on the ‘Goods Declaration’ that such input goods are being imported by the user for the manufacture of goods for subsequent direct or indirect export of finished goods.
Similarly, the input goods may be procured locally directly from a registered person without payment of sales tax and federal excise duty by filing an online ‘Declaration of Local Procurement of Goods’ on the format as may be prescribed by the Board. This declaration shall be processed online through the systematic application of risk parameters and checks about procedural compliances, as may be set by the Board.
According to the revised draft, the licensee may procure customs, federal excise duty or sales tax paid Input goods for the production of output goods, and on the export of output goods, the licensee shall be entitled to refund of sales tax as per provisions of the Sales Tax Act 1990 and the rules made there under and payment of drawback of such duties of Customs and Federal Excise duty, worked out on the basis of standard customs and/or federal excise duty drawback notifications;
Also, input goods and output goods may be transferred in the whole value-added supply chain from one user to another user without payment of customs duty, sales tax, Federal excise duty, and other taxes in accordance with the procedure laid down.
So far as liability and responsibility for the whole amount of duties and taxes is concerned, the stakeholders have suggested that it should be transferred from the licensee Importing or supplying input goods to the licensee receiving the goods subject to online acknowledging receipt of goods by the recipient who shall then legally become liable for subsequent supply to another export sector unit or export directly.
The licensee may remove input goods out of his premises for manufacture or processing by the vendor or toll manufacturing without payment of sales tax and/or federal excise duty against a zero-rated sales tax/Federal excise duty invoice in accordance with the procedure laid down.
Copyright Business Recorder, 2021
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