Major amendments to EFS likely

ISLAMABAD: The government is likely to introduce major amendments to the Export Facilitation Scheme (EFS) 2021 in the upcoming 2026-27 budget to curb the misuse of the facility in the future. A big proposed change in the EFS scheme for exporters is that the financial security in the form of bank guarantee would be replaced with the pos-dated cheque for any excess duty and taxes being deferred or remitted. Official sources told Business Recorder that the Federal Board of Revenue (FBR) has finalized amendments to the EFS, taking into account recommendations of the stakeholders. In this regard, the government is reviewing a budget proposal to revise the EFS in the 2026-27 budget to stop commercial importers from massive misuse of flying invoices in local markets. READ MORE: FBR to introduce key amendments to EFS 2021 One of the proposals is to withdraw the exemption available to the commercial importers under EFS that allows the transfer of their sales tax invoice in the local market. The FBR is making necessary changes in the Customs Rules for the implementation of the revised scheme. The EFS, introduced in 2021, has seen an increase in licenses from 800 to approximately 2, 000. A special drive initiated in May 2024 to curb misuse has led to significant improvements, particularly in the textile industry, which has witnessed notable value addition. Sources said the existing IPO 2022 does not permit the temporary import of used vehicles and auto parts for refurbishment and re-export. Under Para 5(3), read with Serial Nos. 10 and 11 of Appendix-C, the import of used and second-hand vehicles and auto parts is generally prohibited, except for limited categories such as bulletproof vehicles, firefighting vehicles, ambulances, and certain commercial imports. The working group held multiple meetings to examine the feasibility of the pilot project under the EFS 2021 framework. The proposal received broad support from stakeholders, who agreed that amendments to both EFS 2021 and IPO 2022 were necessary to operationalise the initiative. The Ministry of Commerce informed a ministerial forum that a draft summary had been circulated among stakeholders, who endorsed key proposals for submission to the Economic Coordination Committee (ECC) of the Cabinet. These include: (i) Amendment to Serial No. 10 of Appendix-C of IPO 2022 to allow temporary import of vehicles under PCT heading 8703 by service providers with repair and refurbishment facilities verified by the Engineering Development Board (EDB) and registered with FBR under EFS. Such imports would be strictly for repair, restoration, refurbishment, and re-export. Importer-cum-exporters would also be required to submit annual reconciliation statements to the relevant Regulatory Collector; (ii) Amendment to Serial No. 11 of Appendix-C to allow temporary import of used auto parts under similar conditions, exclusively for refurbishment and repair purposes, with mandatory reconciliation reporting; (iii) a strict condition that imported vehicles and parts shall not, under any circumstances, be sold, transferred, or disposed of within the domestic tariff area; and (iv) necessary amendments to EFS 2021 by FBR, including a clear disposal mechanism for salvaged or leftover auto parts. Copyright Business Recorder, 2026

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