Government of Pakistan

(Revenue Division)

Central Board of Revenue

[Sales Tax & Federal Excise Wing]

*****
C. No.1/1-STB/2006 

 Islamabad, the 5th August, 2006.

 

                                     

FEDERAL EXCISE GENERAL ORDER NO. 5/2006

 

 

SUBJECT:     LEVY AND COLLECTION OF EXCISE DUTY ON FRANCHISE FEE/ TECHNICAL FEE/ROYALTY AND PAYMENT THEREOF.

 

 

                        In supersession of the Federal Excise General Order No. 04/2006, the Central Board of Revenue, in order to streamline the levy and collection of excise duty on franchise services, is pleased to issue the following instructions:

 

(i)         In such cases where remittance/payment of the franchise fee or royalty or technical fee is made under a proper agreement between a foreign or local franchiser and a franchisee, the assessable value for the purpose of levy of 5% excise duty shall be the gross amount remitted/paid to the franchiser or the amount laid down in the franchise agreement;

 

(ii)        In case where franchisers are foreign or local beverage companies, if there is no formal agreement between the franchiser or franchisee, the assessable value for the purpose of levy of excise duty shall be 5% of the value of concentrate supplied by the franchiser to the franchisee. However, in such cases where proper remittance/payment of fee or royalty is being made by the franchisee beverage company to the local or foreign franchiser under a proper agreement, the assessable value shall be the gross amount of fee or royalty remitted/paid to the franchiser or the amount laid down in the agreement;

(iii)        For the food sector, in case of a proper franchise or royalty agreement, the assessable value for levy of excise duty shall be the gross amount of franchise fee or royalty remitted/paid to the franchiser or the amount laid down in the agreement. In case there is no formal agreement the assessable value for levy of excise duty shall be 5% of the net sales of the franchisee;

 

(ii)        In case where the franchiser and franchisee are both locally based, the liability to deposit the franchise fee or royalty shall be upon the franchiser ; and

 

(iii)       The excise duty shall be payable on the 15th day of the month, following the payment month laid down in the franchise agreement. Where there is no date prescribed in the agreement or in case of no agreement the duty shall be payable on the 15th day on quarterly basis.

 

 

(Wajid Ali)

Secretary (ST&FE-Budget)