Input goods’ import: SBP unveils procedure for availing EFS ITM facility

KARACHI: The State Bank of Pakistan (SBP) has announced the procedure for availing International Toll Manufacturing facility under Export Facilitation Scheme (EFS) for import of input goods directly or indirectly from the foreign principals without involving any remittance of foreign exchange.

Federal Board of Revenue (FBR) vide SRO 1093(I)/2023 dated August 23, 2023, in terms of which a new Chapter-XL “Export Facilitation Scheme (EFS)-2021” has been added to Customs Rules 2001.

As per Rule 885, a procedure of International Toll Manufacturing (ITM) has been rolled-out for import of input goods directly or indirectly from the foreign principals without involving any remittance of foreign exchange subject to the terms and conditions mentioned therein. According to SBP,

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in this regard, a module has been developed by Pakistan Customs/WeBOC to facilitate EFS including import-cum-export transactions under ITM and a checkbox “EFS toll manufacturer” has been added in GD type “Export Facilitation Scheme”. After completion of relevant formalities, the license holder can avail EFS ITM facility, the SBP maintained.

As per mechanism the import and export of goods under ITM shall be undertaken through single Authorized Dealer (ADs) for reconciliation and reporting purposes.

At the time of import, ADs shall be required to provide a financial instrument (FI) on ‘remittance not involved from Pakistan’ basis in Pakistan Single Window (PSW) before filing of ‘EFS import GD’ availing Toll Manufacturing facility by the local importer-cum-exporter, for import of raw material/input goods from the principal abroad.

At the time of export, ADs will provide FI in PSW equivalent to the service charges/value added, before filing of ’EFS export GDs availing Toll Manufacturing facility by the local importer-cum-exporter. These ‘service charges’ shall be received as foreign remittance from abroad.

ADs shall submit bank credit advice (BCA) against respective FI in PSW confirming receipt/realization of service charges from abroad for release of security submitted to Customs by local importer-cum-exporter at import stage.

The SBP has advised ADs to report realization of foreign exchange equivalent to the service charges, as per the contract, to the SBP. In case of non-realization or delay in realization of export proceeds, ADs shall report such cases as overdue as per the existing procedures.

ADs will also require to perform the KYC/CDD of the applicants and ensure compliance of the EFS scheme parameters and all other applicable rules and regulations including the Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing, as amended from time to time.

In order to operationalise this arrangement, ADs, as part of their due diligence exercise, will obtain EFS license/authorization from Pakistan Customs and other documents.

Copyright Business Recorder, 2023