The Federal Board of Revenue (FBR) has exempted one percent special excise duty (SED) on import of vehicles, aircraft/vessels, chemicals, machinery/equipment by oil and gas exploration and production companies, and abolished federal excise duty (FED) on franchise services payable by the local vendors of the auto parts industry.
The board issued two notifications here on Wednesday to extend the relief to oil and exploration sector. The FBR has included SRO 678(I)/2004 (duty-free imports made by the exploration and production companies) in the list of items on which one percent special excise duty would not be applicable. Therefore, all items specified in SRO 678(I)/2004 have been exempted from one percent SED on fulfilment of conditions of the notification.
According to SRO 185(I)/2008, the board has exempted FED on franchise services falling under Pakistan Customs Tariff (PCT) Heading 9823.0000 payable by the vendors of auto parts industry having Technical Agreements with foreign based auto parts manufacturing companies.
Through SRO 286(I)2008, the exemption of one percent SED would be applicable on import of machinery, equipment, materials, specialised vehicles or vessels, picks-ups (4x4), helicopters, aircraft, accessories, spares, chemicals and consumables, as are not manufactured locally, imported by the exploration and production companies, their contractors, sub-contractors and service companies.
All petroleum sector companies, corporations and organisations including their contractors and sub-contractors and service companies shall be entitled to import machinery, equipment, helicopters, aircraft, drilling bits, drilling and seismic (on-shore or off-shore) vessels, drilling rigs, specialised vehicles which fall under PCT heading 87.05 including accessories and spares that are part of such vehicles and vessels for the purpose of construction, erection, exploration and production of petroleum projects on an import-cum-export basis.
The exemption of one percent SED would also be applicable on the import of machinery and equipment, as are not manufactured locally, imported by companies other than exploration and production companies.
One percent SED would not levied on import of raw materials and components, as are not manufactured locally, and are imported for use in the manufacture of above-mentioned goods to be supplied to the petroleum sector companies.
The exemption available to E&P companies shall be admissible only to such E&P companies who hold permits, or licences, or leases or concession or production sharing agreement and who enter into supplemental agreements with government. The importers shall maintain an account of all imports along with the relevant record as prescribed by the Customs Rules, 2001 and Sales Tax Act, 1990.