Friday, 19 August 2022
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TAXATION

FBR introduced list of mandatory documents for claim of duty drawbacks

The Federal Board of Revenue (FBR) has introduced a mandatory requirement of six documents for the claim of duty drawbacks on local supplies, free of duty imports, and taxes to avoid any misuse of the facility.

The FBR issued an amendment draft in Customs act to make the process of the claim of duty drawback foolproof.

In the amendment draft, it has been suggested that almost six documents will be required to claim duty drawback. The draft states, “Documents required for claims of duty drawback on local supplies made against the international tender or for supply to industrial units, projects, institutions, agencies and organizations, entitled to import free of duty and taxes shall include a copy of advertisement calling for international tenders, copy of contract, sales tax invoice, freight or carriage bill like bilty; certificate of receipt of goods by the buyer agency or institution and proof of receipt of sales proceeds or funds in foreign exchange into SBP in case of supplies involving foreign exchange component in procurement or bank statement showing receipt of funds (local currency) from the buyer.”

List of documents required for claim of duty drawbacks?

The documents required for claims of duty drawback on local
supplies made against international tender or for supply to
industrial units, projects, institutions, agencies and organizations,
entitled to import free of duty and taxes shall include

  1. advertisement calling for international tenders;
  2. copy of contract;
  3. sales tax invoice;
  4. freight or carriage bill like bilty;
  5. certificate of receipt of goods by the buyer agency or institution; and
  6. proof of receipt of sales proceeds or funds in foreign exchange into SBP in case of supplies involving foreign exchange component in procurement or bank statement showing receipt of funds (local currency) from buyer, as the case may be.

It is pertinent to mention that several cases of fake duty drawback claims have been observed by FBR.

The draft further states, “Exported goods mean exported item to any foreign country including Export Processing Zone in Pakistan or for supplies against international tenders, or for supply to industrial units, projects, institutions, agencies and organizations, entitled to import at concessionary rates.”

The Collector of Customs with jurisdiction on the area where the unit is registered shall process such Duty Draw Back Claims.

What is duty drawback for importers and exporter in Pakistan?

Duty drawback is an export incentive that many countries, including Pakistan, offer to allow both exporters and importers recover certain duties, fees, or taxes paid on imported merchandise. It may be understood as a refund of duties collected on imported goods, which are then exported.

When Prime Minister Imran Khan approved the five-year Strategic Trade Policy Framework on March 13, 2020, there were indications that the new framework will incentivize several non-traditional sectors to boost exports as well as transfer the roles related to duty drawback and local taxes and levies (DLTL) and sales tax refunds from the Federal Board of Revenue (FBR) and the Ministry of Commerce to the SBP.

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