ISLAMABAD: The Federal Board of Revenue (FBR) has withdrawn facility of Export Facilitation Scheme (EFS) 2021 from importers of iron and steel scrap to check massive misuse of the facility.
The FBR has issued an SRO 204(I)/2025 here on Tuesday to introduce draft amendments in the Customs Rules, 2001.
A tax expert opined that by excluding iron and steel scrap from EFS, now the importers of compressors/motors will have to pay all taxes at import stage like customs, sales tax and income tax.
Misclassification of steel products: FBR urged to recover taxes from importers
Moreover, when they will sell their scrap locally, they will not be able to issue sales tax invoices - which will close the door of tax evasion.
In this way, all those units who were involved in buying flying invoices from importers of compressors/motor scraps will have to pay full 18 per cent sales tax if they buy local scrap or compressor scrap. The industry has been in the forefront in getting it done to ensure everyone pays taxes equally. This move is to create level playing field in the long steel sector, he added.
According to the revised procedure, the proposed changes in the EFS seek reduction in input utilisation period, input authorisation based on production capacity/input-output ratio, replacement of insurance guarantees with bank guarantees, vendor facilitation controls, withdrawal of samples to ensure the utilisation of imported input in the exported goods, and withdrawal of EFS facility from importers of iron and steel scrap.
The input goods acquired under these rules shall be utilised within nine months extendable in exceptional circumstances by a committee to be constituted by the board.
For supplies against international tenders or to exempt projects or sectors in Pakistan, the user shall be required to file a declaration in WeBOC system, the FBR said.
An applicant showing a poor compliance profile i.e. having one or more contravention cases adjudged against him or having pending recovery cases or pending criminal proceedings, the authorisation granted shall on providing opportunity of defence be suspended immediately and the Regulatory Collector may initiate proceedings for cancellation of the authorization besides other legal action, new rules said.
The authorisation of the value of input goods shall be uploaded for each year based on annual estimated requirement determined by Input Output Coefficient Organisation (IOCO).
The uploading of the authorization for the subsequent year shall be subject to satisfaction of regulatory collector that no action under the Customs Act is pending against the user and the user has submitted all reconciliation statements.
The regulatory collector, upon satisfaction that the input goods have been illegally removed from the premises or disposed-off or retained beyond the utilisation period or failed to achieve the value addition in the utilisation period as required under these rules, shall immediately proceed to encash the PDC or bank guarantee, as the case may be.
The customs computerised system may assign Goods Declarations filed under these rules for withdrawal of samples on computerised selectivity criteria, the FBR added.
Copyright Business Recorder, 2025
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