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FBR may remove procedural flaws in EOUs and SME rules

ISLAMABAD (June 09 2008): The Federal Board of Revenue (FBR) is likely to remove procedural flaws in the Export-Oriented Units (EOUs) and Small and Medium Enterprises Rules, 2008, in coming budget, which have created serious problems for collectors of customs in issuance of fresh licenses to the applicant units.

Sources told reporters on Sunday that the sketchy rules have confused both the business community and the collectors due to absence of the amount required for submission of bonds as financial security. In the absence of the specified amount, it is not possible to obtain a general bond from the manufacturers-cum-exporters.

The amount of security has not been specified in the rules, which gives vague powers to the collectors to demand any amount from the unit. The amount should be specified in view of profiles of exporters or some token amount before issuance of license.

For example, the rules have specified that the unit exporting at least 80 percent of its production to other countries if established before July 1, 2007; or 100 percent of its production to other countries if established on or after July 1, 2007. Based on the anticipated volume of exports, if the collector demand financial security or general bond, there might be change in exports volume in future. The security bond involving more amount would definitely increase the financial cost of the exporter.

Sources said the board may amend the relevant rules to remove this ambiguity from 2008-09. Under the rules, it is necessary to maintain all import records electronically. However, the rules have not specified the computer program or module to be used for verification of record.

Thirdly, the licensee shall arrange or install in his export-oriented unit online automated system to record and display details of input goods, manufactured goods and output goods exported on daily basis for monitoring by the collector. The post-exportation audit shall be conducted by the relevant Collector of Sales Tax and Federal Excise. Necessary data of imported and locally procured input goods and other relevant information of the licensee shall be provided by the collector of customs to the collector of sales tax. Sources said the collector of customs is responsible for monitoring and management of the export units.

The license is also being provided by the collector of customs. It is totally unjustified that the audit powers have been granted to the relevant collector of sales tax despite the fact that he does not have updated information on the unit.

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