04-04-2007, 10:18 PM
Dear,
There is no compulsion to open an L/C. If you want to deal this transaction through your bank against document acceptance (DA basis), you can make advance payment upto maximum 50 % of total value as allowed by SBP. More than 50 % payment in advance is not allowed. In this case, the supplier while sending you the equipment will make Bill of Lading (B/L) in the name of your bank and documents will also be received through your bank. Bill of exchange will also be issued by you. On receipt of documents you will get the equipment from the port by paying custom duties and taxes. You will have to make balance payment from that bank as well on documents acceptance.
As a second option, if you have to make 100% payment in advance, you can send the supplier TT through money dealers. It is also very very common. There will be no record with any of your bankers as u will purchase foreign currency from market. In this case, it is must that the supplier makes bill of lading in the name of your company directly instead of nay bank. Supplier will send you documents directly. You will take your B/L copy with you and get your equipment from port after making payment of duties and taxes.
You need not to deduct income tax because when the manifest will be recieved, the customs authorties will apply income tax to your imports and will take payment from you for various duties and taxes.
Some of these taxes (like income tax and sales tax) are refundable and do not make part of cost of the equipment. Other duties will be added to the advance payment made for equipment, in your accounting record, to make part of the total value of the asset to be capitalized.
Best regards,
Kamran.
There is no compulsion to open an L/C. If you want to deal this transaction through your bank against document acceptance (DA basis), you can make advance payment upto maximum 50 % of total value as allowed by SBP. More than 50 % payment in advance is not allowed. In this case, the supplier while sending you the equipment will make Bill of Lading (B/L) in the name of your bank and documents will also be received through your bank. Bill of exchange will also be issued by you. On receipt of documents you will get the equipment from the port by paying custom duties and taxes. You will have to make balance payment from that bank as well on documents acceptance.
As a second option, if you have to make 100% payment in advance, you can send the supplier TT through money dealers. It is also very very common. There will be no record with any of your bankers as u will purchase foreign currency from market. In this case, it is must that the supplier makes bill of lading in the name of your company directly instead of nay bank. Supplier will send you documents directly. You will take your B/L copy with you and get your equipment from port after making payment of duties and taxes.
You need not to deduct income tax because when the manifest will be recieved, the customs authorties will apply income tax to your imports and will take payment from you for various duties and taxes.
Some of these taxes (like income tax and sales tax) are refundable and do not make part of cost of the equipment. Other duties will be added to the advance payment made for equipment, in your accounting record, to make part of the total value of the asset to be capitalized.
Best regards,
Kamran.
