The Federal Board of Revenue (FBR) has proposed major amendments to the Export Finance Scheme (EFS) aimed at preventing misuse and enhancing tax compliance. The changes, introduced under SRO204 of 2025 in the Customs Rules 2001, include stricter monitoring mechanisms, increased financial guarantees, and a potential withdrawal of EFS benefits for iron and steel scrap importers.
According to a news report, the draft amendments will be finalised within a week after consultations with stakeholders. A key revision involves removing the role of the Engineering Development Board (EDB) in approving engineering goods and input-output ratios, with references to the EDB set to be eliminated within six months.
New security requirements have been proposed for manufacturers-cum-exporters. Companies with annual exports of $20 million or more over the past two years must furnish an indemnity bond and post-dated cheques (PDCs).Â
Those exporting below $20 million will be required to provide PDCs equivalent to their average duty and taxes on inputs over the last two years, along with bank guarantees for any excess duty deferments.
Users with a history of non-compliance—including pending recoveries, contraventions, or criminal proceedings—will face immediate suspension of their authorization. The amendments also introduce stricter reconciliation and stock audit requirements, where non-compliance could result in further suspensions.
To tighten oversight, FBR has enhanced monitoring mechanisms such as real-time tracking of imports and exports via WeBOC/PSW systems, sampling at import/export stages for quality control, and increased regulatory audits. The utilisation period for input materials is now nine months, with exceptions granted only in special cases. Vendors must be pre-declared, geo-tagged, and approved in the WeBOC system before transactions.
FBR has also tightened domestic sales regulations, capping factory rejects and B-grade goods at 5% of total production, with any excess taxed at import rates. Wastage claims beyond prescribed limits will be subject to higher scrutiny.
Financial penalties for EFS violations have also been proposed. Unauthorized removals or extended utilization periods will lead to immediate encashment of bank guarantees/PDCs, while delays in reconciliation statements will result in system restrictions on further acquisitions.
For operational efficiency, the chief collector (exports and IOCO) must process cases within 60 days, while new entrants into EFS must submit quarterly reconciliation statements for the first three years. Regulatory collectors will also be responsible for frequent stock-taking and monitoring of utilization records to ensure compliance with the revised rules.
