The government is in the process of drafting major tax-related facilitative measures for exporters in the budget (2021-22) under an integrated strategy to ensure a significant increase in exports of Pakistan.
Top government officials told Propakistani that the government is issuing a new simplified scheme for exporters in the coming budget (2021-22) to allow the import of duties and taxes free input and raw materials consumed in the manufacturing of export goods. Finance Bill 2021 would incorporate the new scheme for exporters.
The exercise has been started to take a viewpoint on the new scheme. The scheme has been drafted and shared with the leading exporter associations for comments. The scheme would integrate all existing export schemes operated by the Federal Board of Revenue (FBR). Presently, different schemes are used by the exporters which would be integrated into a single scheme.
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The FBR has devised an integrated strategy to increase exports including simplification of all export facilitation schemes, zero percent import duties on 1,623 tariff lines of basic raw material/intermediate goods, an automated system for filing of duty drawback claims, and upward revision in duty drawback rates for eight sectors.
The import duties on 1,623 tariff lines, pertaining to basic raw material and intermediate goods were reduced to zero through the Finance Act, 2020.
In pursuance of this strategy, additional customs duties and regulatory duties on 164 items related to the textile sector, not manufactured in the country, were also removed in collaboration with all the stakeholders.
All these measures were undertaken with the objectives of neutralizing the adverse impact of the Covid-19 pandemic, especially for the exporters, and to make their products competitive vis-à-vis those of their competitors in the international market.
Under the initiative of “Make in Pakistan”, the duty drawback rates for at least eight sectors were revised upwards by the FBR.
During the whole exercise, more than 434,000 claims were disposed of and approximately 7,800 exporters have benefited from this initiative. In order to tangibly contribute to exports, all the export facilitation schemes were simplified/rationalized for their optimal use by the exporters.
First of all, extension in utilization period of different export facilitation schemes was allowed for a period of one year from 1st March, 2020 to 28th February, 2021.
Second, the retention period for plant and machinery, under the Export Oriented Units Scheme, was reduced from 10 years to five years.
Third, for the prompt redressal of grievances, one administrative tier is reduced (under Duty and Taxes Remission for Export Scheme and Manufacturing Bond Scheme) and Regulatory Authority is created to facilitate the exporters.
Moreover, the investors in Export Processing Zones have been facilitated in payment of duties/taxes on the disposal of machinery in the tariff area.
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To realize the objective of facilitation/promotion of exports, an automated system of filing the claim to the final sanctioning of duty drawback claims for the payment of Duty Drawback Claims to the exporter was rolled out on 1st October 2020.
As a matter of fact, the export Goods Declaration filed in the Customs WeBOC system is being considered as the duty drawback claim.
The State Bank of Pakistan credits the system sanctioned payments in the accounts of exporters online directly.
In addition to the said automation initiative, Green Channel clearances of the exports GDs/consignments were increased from 74 percent in July, 2020 to 77.3 percent in December, 2020.
Similarly, for speedy payment of sales tax refunds to exporters, the “FASTER PLUS System” has been implemented.
The FBR has also removed regulatory duty on import of cotton yarn, till 30th June 2021, which is a basic raw material for the value-added textile industry of Pakistan.
Being committed to the national goal of an increase in exports, the FBR is making all-out efforts to assist exporters by continuously making improvements in its laws and procedures.
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