The Federal Board of Revenue (FBR) has issued a new procedure on the supply of locally produced taxable goods by sales tax registered persons against international tender contracts awarded by the federal and provincial government departments, local governments, autonomous and semi- autonomous bodies and public sector organisations.
In this connection, the FBR has amended the Sales Tax Rules 2006 here on Friday to explain procedure on the supplies made against international tenders. According to new rules, the supplies of locally produced goods against international tender contracts shall be charged to tax at the rate of zero per cent subject to the following procedure and conditions:
Firstly, the supply shall be made against International Tender issued by the Federal and Provincial Departments, Local Government, autonomous and semi-autonomous bodies and public sector organisation (hereinafter referred to as 'the contract awarding persons').
Secondly, the zero-rated supply of goods against International Tender shall be to the extent of foreign grant, aid or loan component of the tender. The foreign component of the International Tender shall be received in foreign currency which shall be surrendered by the contract awarding person to the State Bank as per State Bank procedure and foreign exchange regulations.
Thirdly, the invitation of bids for International Tender shall be published in reputed newspapers of journals of international circulation and on website of the contract awarding person for International Competitive Bidding. Fourthly, the contract awarding persons or the successful bidder shall apply to the Board to avail the benefit of zero-rating of supplies against the International Tender along with the necessary documents. The documents included application giving full particulars of applicant viz name, address, telephone numbers, e-mail address, NTN, STRN (if applicable) and any other information that he wants to submit. A certificate from the contract awarding persons that Public procurement Regulatory Authority Rules, 2006 have been complied with during the process of International Competitive Bidding or International Tender. Other documents included a certificate from the respective bank or authorised dealer of foreign exchange in proof of deposit of foreign exchange with the State Bank of Pakistan, tender amount of foreign exchange and equivalence in Pak Rupees and tentative list of goods required for the execution of tender and particulars of the supplier in the specified format.
As per rules, the contract awarding person or the bidder may submit revised list of goods as required anytime during the currency of the execution of the project. The Board, subject to satisfaction shall issue a provisional authorisation for zero-rated supply of goods and shall endorse one copy of such authorisation to each supplier and to the respective RTOs or LTUs.
After having provisional authorisation of the Board the supplier shall issue zero-rated invoice for each supply, mentioning full particulars of the buyer, a contract number, besides particulars required. After conclusion of the contract, the contract awarding person or the bidder shall submit a complete and final list of goods in the format prescribed. Subject to satisfaction, the Board shall issue final authorisation certificate for zero-rated supply of goods and shall endorse one copy to each supplies and to the respective RTO or the LTU.
Each registered person shall keep the copy of final authorisation certificate as a lawful authorisation of supply of zero-rated goods to the extent given in the final certificate. In case, the goods are found not to be supplied against International Tender the sales tax involved on such goods shall be recoverable from the supplier, besides legal or penal action under appropriate provisions of the Act.
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