KARACHI: The State Bank of Pakistan (SBP) has allowed sugar mills to make advance payment up to 100 percent of the value of the contract for import of raw sugar.
The federal government has recently allowed import of 300,000 metric tons of raw sugar by the sugar mills with tax concession.
The government has reduced withholding income tax on import of raw sugar from 5.5 percent to 0.25 percent for the sugar mills.
Accordingly, the State Bank on Monday asked all the authorized dealers (banks) in foreign exchange to process the requests of the sugar mills for import of raw sugar as per government directives. Banks have been directed to allow import on cost and freight (CFR) free out basis to the sugar mills that have been issued quota by the Ministry of Commerce. The SBP has told the authorized dealers that advance payment up to 100 percent of the value of the contract or proforma invoice may be allowed to sugar, subject to compliance with other applicable foreign exchange regulations given under Chapter 13 of the FE manual.
As per the term and conditions, all the authorized dealers will be required to submit consolidated data of Letter of Credit (LCs) issued and advance payments made against issued quotas to the Foreign Exchange Operations Department, SBP BSC, on a daily basis by close of business same day.
The ADs have also been asked to ensure compliance with all the other terms and conditions announced by the Ministry of Commerce.
In order to avoid shortage of sugar in the country, the federal government has decided to import raw sugar.
The Ministry of Commerce will allocate import quota for raw sugar to the interested sugar mills. The raw sugar import quota will be issued on first-come-first-served basis.
The minimum quantity of quota allocation to a single sugar mill will be 10,000 metric tons and the maximum will be 50,000 metric tons.
A sugar mill that has been granted the import quota under this scheme will be bound to open an irrevocable LC or make advance payment for import of the commodity within seven working days of the grant of the quota.
Copyright Business Recorder, 2021
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