FBR Introduces Major Changes to Export Finance Scheme

The Federal Board of Revenue (FBR) has introduced major changes in the Export Finance Scheme (EFS) to check misuse of the facility. The FBR issued SRO301(I)/2025 on Friday to amend Customs Rules, 2001. Under the SRO.301(I)/2025, the Board has withdrawn facility of Export Facilitation Scheme (EFS) 2021 from importers of iron and steel scrap. There are also changes in the security requirements of availing the facility. The manufacturing-cum-exporters having a minimum export value of $20 million or above in the last two years will have to furnish an indemnity bond and post-dated cheques (PDC). On the other hand, manufacturers-cum-exporters having exports value less than $20m will have to furnish indemnity bond and PDC equivalent to the average annual duty and taxes of input goods used in exports in the last two years, and bank guarantee or revolving bank guarantee shall be furnished for any excess duty and taxes being deferred or remitted. The users with poor compliance history (pending recoveries, contraventions, or criminal proceedings) will have their authorisation suspended immediately, pending a defence. Moreover, non-compliance in reconciliation statements or stock audits can lead to suspension. According to the revised procedure, the proposed changes in the EFS seek reduction in input utilisation period, input authorisation based on production capacity/input-output ratio, replacement of insurance guarantees with bank guarantees, vendor facilitation controls, withdrawal of samples to ensure the utilisation of imported input in the exported goods, and withdrawal of EFS facility from importers of iron and steel scrap. The input goods acquired under these rules shall be utilised within nine months extendable in exceptional circumstances by a committee to be constituted by the board. For supplies against international tenders or to exempt projects or sectors in Pakistan, the user shall be required to file a declaration in WeBOC system, the FBR said.