Islamabad, November 18, 2025 – The Federal Board of Revenue (FBR) has released a detailed draft of the insurance guarantee format required under Pakistan’s Export Facilitation Scheme (EFS), originally notified through SRO 957(I)/2021.
The proposed format outlines the structure, conditions, and responsibilities of insurance companies, exporters, and customs authorities regarding guarantees issued for duty- and tax-free import of inputs and capital goods.
According to the draft, insurance companies will be required to issue irrevocable and unconditional guarantees on behalf of exporters in favour of the FBR. These guarantees will support compliance with the EFS—allowing exporters to import raw materials and machinery without upfront payment of duties and taxes, provided they meet all obligations under the scheme.
The FBR notes that exporters availing the EFS must furnish financial security sufficient to cover all potential liabilities, including customs duties, taxes, surcharges, fines, penalties, or any other charges that may arise from non-compliance. The guarantee ensures that, in the event of default or breach by an exporter, the FBR can recover the full amount without delay.
Under the proposed format, the guarantor insurance company must assume primary liability, acting beyond the role of a traditional surety. Once the FBR issues a written demand, the insurer will be obligated to pay the guaranteed amount immediately—without raising objections, seeking verification from the exporter, or invoking legal delays. The FBR’s declaration of non-compliance will be considered final and binding.
The draft outlines several key features of the guarantee:
• It must be independent, unconditional, and enforceable on the first written demand from the customs authority.
• The maximum liability will be capped at the amount stated in the guarantee.
• Payments must be made promptly in Pakistani Rupees without any set-off or counterclaim.
• Multiple demands may be raised during the validity period until the full guaranteed sum is exhausted.
• Guarantors must maintain sufficient collateral and comply with the Credit and Suretyship (Conduct of Business) Rules, 2018, including exposure limits prescribed by SECP.
The guarantee will remain enforceable regardless of legal disputes, extensions granted to exporters, changes in business ownership, or amendments to the scheme. Insurance companies issuing such guarantees must also hold an eligible PACRA credit rating of AAA (ifs) or AA+ (ifs) at the time of issuance.
The draft further clarifies that all obligations of the guarantor will be governed exclusively under Pakistan’s laws, and any disputes will fall under the jurisdiction defined in the Customs Act, 1969.
The FBR is expected to finalize the guarantee format after receiving stakeholder feedback. The new framework aims to strengthen compliance under the Export Facilitation Scheme while supporting exporters through a more structured and transparent risk-mitigation mechanism.