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Duty and sales tax relief on machinery import to be allowed

ISLAMABAD (June 06 2003) : To meet export target assigned to industrial/manufacturing sector, the government has decided to allow exemption of customs duty and sales tax on the import of machinery, equipment and spares to indirect exporters from next fiscal year (2003-2004).

The facility was extended to export sector under SRO 554(I)/98 for expansion of export base, but in certain cases exporters were finding it difficult to meet the laid down targets.

To achieve the requisite target, indirect exporters would be allowed to manufacture and subsequently export the quantity specified by export industry to avail duties and taxes exemption.

This would help export industries like engineering and leather to achieve the required export target under SRO 554(I)/98.

At present, certain export industries were finding it difficult to meet the export target as per said notification and were penalised to pay full customs duty and sales tax leviable at the time of importation of such machinery.

To ensure achieving of export targets, the indirect exporters would share certain percentage of export target with the direct exporter enabling them to avail duties and taxes concessions.

The Central Board of Revenue (CBR) has incorporated budget proposal of All Pakistan Textile Mills Association (Aptma) under which indirect exporters could also enjoy the benefit of SRO 554(I)/98 from fiscal 2003-2004.

Exporters of leather footwear and engineering goods were bound to meet the export target of 20 percent of the value of their actual production during first three years.

However, 50 percent of the value of their actual production should be exported after three years.

Other industries have to export 50 percent of the value of actual production during first two years. After two years, 60 percent of the value of actual production need to be exported.

The export target on 'expansion of existing unit' is 50 percent of additional capacity in the first three years.

After three years, 60 percent of the additional capacity would be exported.

All the industries specified in the SRO 554(I)/98 could assign task of manufacturing-cum-export to such indirect exports, whose export would be counted for the purpose of 'computation'.

If export target of a specific industry is 60 percent, the main exporter would achieve 30 percent and remaining 30 percent by the indirect exporter.

This comes to 60 percent fulfilling the condition of the relevant SRO.

Under SRO 554(I)/98, the exemption of customs duty and sales tax is available on the machinery and spares, not manufactured locally, imported for setting up a manufacturing unit or for expansion, balancing, modernisation and replacement of existing units.

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