July 14, 2006	Friday	Jumadi-ul-Sani 17, 1427

ISLAMABAD, July 13: The Central Board of Revenue (CBR) has issued procedures for determination of assessable value for the purpose of levy of excise duty on franchise fee or technical fee or royalty.

The procedures were issued through Federal Excise General Order No. 04 here on Thursday, saying every person, firm or company using the right to deal with the goods or services of the franchiser under a franchise agreement against a fee or royalty shall pay 5pc of the gross amount of franchise fee or the deemed franchise fee or technical fee or royalty charged by the franchiser from the franchisee.

To ensure proper collection of levy of excise duty on franchise services, the CBR issued the parameters which includes in such cases where remittances of the fee or royalty are made through the State Bank of Pakistan under a proper agreement between a foreign franchiser and a Pakistani franchisee, the assessable value for the purpose of levy of 5pc excise duty shall be the gross amount remitted or 5pc of the net sales whichever is higher.

In case of foreign and local beverage companies, where there is no explicit agreement between the franchiser or franchisee, or there is no proper remittance of franchise fee or royalty or technical fee, the assessable value for the purpose of levy of excise duty shall be 5pc of the value of concentrate supplied by the franchiser to the franchisee.

However, in such cases where proper remittances of fee or royalty are being made by the beverage companies, the assessable value shall be the gross amount of fee or royalty remitted through the State Bank of Pakistan; and for the persons dealing in food items, the assessable value for levy of excise duty shall be the gross amount remitted through the State Bank of Pakistan or 5pc of the net sales whichever is higher.