Procedure for EIF pre-approval: FBR, SBP to help overcome challenges facing exporters

ISLAMABAD: The Federal Tax Ombudsman (FTO) has asked the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP) to resolve the issues of exporters regarding the procedure prescribed for electronic import form (EIF) pre-approval, by the SBP, vide EPD circular no11 of 2022.

The FTO has issued an order here on Thursday in this regard.

The importers informed the FTO that the Exchange Policy Department of the SBP, vide circular No. 11 of 2022 dated 05.07.2022, issued directions that authorised dealers are required to seek prior permission from the Foreign Exchange Operations Department, the SBP BSC, before initiating transaction for import of goods, listed in Annexure to Circular No.11 of 2022 dated 05.07.2022.

The FTO’s order stated that it is evident that instant complaints relate to SBP’s Circular dated 05.07.2022, not directly related to FBR, therefore, not falling within the jurisdiction of this forum.

However, issue involves tax revenues mobilization, national foreign exchange reserves, trade balance, susceptibility of national exports and running of local industry, therefore, requires immediate collective wisdom of FBR, State Bank of Pakistan, Ministry of Commerce, Ministry of Finance and Economic Coordination Committee of the Cabinet, in consultation with FPCCI, Chambers of Commerce and Industry and other stakeholders, to look for sustainable answers/resolution.

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The FTO has recommended the FBR to forward findings/recommendations of this Forum to all stakeholders for reflection and further processing/fine-tuning for further action.

The FBR should invite input from FPCCI, Chambers of Commerce and Industry and other stakeholders and process recommendations on merit.

The FBR should propose immediate possible holding of meeting of the ECC of Cabinet once input, provided by business stakeholders, is evaluated/processed by stakeholders’ departments/ministries, as well.

The FTO order said the issue has been creating ripples amongst stakeholders of export industry at national level.

The Lahore Chamber of Commerce and Industry’s president has also repeatedly taken up this matter with FTC Regional Office, Lahore. Initiative of the government is to reduce gap in balance of trade but measures taken are not commendable as government’s motto is to increase exports to strengthen economy and earn more foreign reserves but regulatory measure has given space to smuggling, mis-declaration and unfair means as well as resulting in reduced collection of customs duty, income tax and sales tax. When consignment is not released within 14 free days, shipping line starts charging detention/container rent, which varies from USD 80-150 per calendar day, including holidays. This payment is made to the shipping line at the open market USD rate and the same amount is repatriated to head offices abroad in the shape of foreign exchange which is also a great loss. No consignment is being released from the port which is creating congestion at port, adding to port demurrage charges.

Chamber made certain recommendations, stating therein that (i) in order to avoid additional cost on account of demurrage, shipping line charges/other port charges, importers should be allowed in bonding of consignments, currently under SBP above stated regulatory procedure (ii) importers should be allowed to apply approval immediately after issuance of BL; (iii) there should be time frame, set by SBP to approve documents well before arrival of consignment; (iv) there should be no pick and choose, should be on FIFO basis; (v) LC is backed by guarantee from State Bank but, under new measures, needs to be approved which is not understandable as, after Pakistan’s WTO ratification status, all items are freely importable into Pakistan; (vi) definition of luxury items needs to be corrected immediately as most of the items, lying in above stated chapters, are industrial inputs which are essential for running industry; (vii) most of the orders to commercial banks are verbal, like documents/invoices over and above USD 100000.00 need to be released after prior approval. Such invoices are mostly of industrial importers who need their material for making product and fulfill their export order; (viii) luxury items (after correction of definition) be allowed to be imported with maximum rate of duties and taxes at par with practice in neighbouring countries, in order to support local industry; and (ix) in view of current flood situation in Pakistan, FRRF @ two per cent be imposed on all imports for 02 months so as to raise nation’s on resources for re-building infrastructure and to rehabilitate flood affectees.

Copyright Business Recorder, 2022