E&P companies to provide 5-year corporate guarantee

KARACHI: The exploration and production (E&P) companies will have to provide corporate guarantee of five years for the import of duty and tax-free vehicles and machinery, according to a notification issued by the Federal Board of Revenue (FBR) on Tuesday.
Furthermore, the tax authorities have disallowed the imports by subcontractors to E&P companies. According to the notification, the concessionary regime for import of machinery and vehicles has been amended.
The FBR said that all petroleum sector companies, corporations and organisations, including their contractors and service companies would be entitled to import machinery, equipment, helicopters, aircrafts, drilling bits, drilling and seismic (on shore or off shore) vessels, drilling rigs, specialized vehicles including accessories and spares, for the purpose of construction, erection, exploration and production of petroleum projects on an import-cum-export basis without payment of duties and taxes against a corporate guarantee valid for a period of five years equal to the value of import duties and taxes exempted.
The collector of Customs from time-to-time will review the contract. The collector concerned will allow extension for a further period, as deemed appropriate, on the payment of one percent surcharge for each year on the cost and freight value of the goods for which extension has been sought.
The goods should not be exported on the expiry of the project or transferred with the approval of the collector of Customs to another petroleum project, or the period of stay has been extended by the collector of Customs, then the company or their contractors or service companies, as the case may be, will be liable to pay duties and taxes chargeable at the time of import.