Govt mulls Export Facilitation Scheme changes to curb flying invoice misuse by commercial importers

The federal government is reviewing proposals to amend the Export Facilitation Scheme (EFS) in the upcoming FY2026-27 budget to curb the alleged misuse of flying invoices by commercial importers in local markets, Business Recorder reported, citing sources. 

One of the key proposals under consideration is the withdrawal of the exemption that currently allows commercial importers operating under the EFS to transfer sales tax invoices in the domestic market.

Documented sectors, including the steel industry, have also submitted budget proposals seeking the removal of the exemption, arguing that it has created unfair competition and enabled tax evasion.

Industry stakeholders said documented manufacturers and importers contributing taxes and duties to the national exchequer were struggling to compete against entities allegedly avoiding taxes through misuse of the scheme.

According to the proposals, the exemption available under S. No. 57, Table-2 of the Sixth Schedule of the Sales Tax Act may also be rationalised to restrict misuse of input tax adjustments.

The documented sectors have further proposed reducing the deferment rate of Value Addition Sales Tax at the import stage from 17.5% to 0% under the EFS.

Industry representatives maintained that the deferment of Value Addition Sales Tax was causing substantial revenue losses to the Federal Board of Revenue (FBR) and creating distortions in the steel scrap market due to differences in landed costs of similar imported products.

They said the existing structure was affecting fair competition and called for immediate corrective measures to ensure a level playing field for documented sectors.

The proposals are part of broader discussions ahead of the federal budget for FY2026-27 as authorities review tax exemptions, revenue measures and trade facilitation schemes.