ISLAMABAD: The government has curtailed the scope of the Export Facilitation Scheme (EFC) of exporters under the Finance Bill 2024.
The Finance Bill 2024 proposed the elimination of the zero rating on local supplies under the Export Facilitation Scheme (EFS).
According to Arshad Shehzad-a tax expert, the provision for local supplies of commodities, raw materials, components, parts, and plant and machinery to registered exporters authorized under the Export Facilitation Scheme, 2021, as notified by the board, is proposed to be removed.
Shehzad highlighted that zero-rating supplies under the Export Facilitation Scheme constitute a significant relief for the export sector, as exporters are progressively transitioning to the EFS scheme to obtain duty- and tax-free purchases for export purposes.
Shehzad believed that the proposal to omit this provision may significantly impact exporters who are already contending with the challenges of a demanding operational environment. The elimination of the zero-rate facility under the EFS scheme has provided much-needed cash flow support and relief for exporters. Consequently, the withdrawal of this facility is likely to detrimentally affect the export industry, requiring exporters to initially pay taxes on local procurements and subsequently seek refunds.
Copyright Business Recorder, 2024
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