Glossary_L
Glossary of Tax and Trade Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
land customs-station means any place including an inland river port declared under section 9 to be a land customs-station; [Pakistan Customs Act, 1969]
Letters of credit : A letter of credit adds a banks promise of paying the exporter to that of the foreign buyer when the exporter has complied with all the terms and conditions of the letter of credit. The foreign buyer applies for issuance of a letter of credit to the exporter and therefore is called the applicant; the exporter is called the beneficiary.
Payment under a documentary letter of credit is based on documents, not on the terms of sale or the condition of the goods sold. Before payment, the bank responsible for making payment verifies that all documents are exactly as required by the letter of credit. When they are not as required, a discrepancy exists, which must be cured before payment can be made. Thus, the full compliance of documents with those specified in the letter of credit is mandatory.
Often a letter of credit issued by a foreign bank is confirmed by a local bank. This means that the local bank, which is the confirming bank, adds its promise to pay to that of the foreign, or issuing, bank. Letters of credit that are not confirmed are advised through a local bank and are called advised letters of credit. Exporters may wish to confirm letters of credit issued by foreign banks not only because they are unfamiliar with the credit risk of the foreign bank but also because there may be concern about the political or economic risk associated with the country in which the bank is located. An international banker can help exporters evaluate these risks to determine what might be appropriate for each specific export transaction.
A letter of credit may be either irrevocable (that is, it cannot be changed unless both the buyer and the seller agree to make the change) or revocable (that is, either party may unilaterally make changes). A revocable letter of credit is inadvisable. A letter of credit may be at sight, which means immediate payment upon presentation of documents, or it may be a time or date letter of credit with payment to be made in the future. See the Drafts section of this chapter.
Any change made to a letter of credit after it has been issued is called an amendment. The fees charged by the banks involved in amending the letter of credit may be paid by either the exporter or the foreign buyer, but who is to pay which charges should be specified in the letter of credit. Since changes can be time-consuming and expensive, every effort should be made to get the letter of credit right the first time.
An exporter is usually not paid until the advising or confirming bank receives the funds from the issuing bank. To expedite the receipt of funds, wire transfers may be used. Bank practices vary, however, and the exporter may be able to receive funds by discounting the letter of credit at the bank, which involves paying a fee to the bank for this service. Exporters should consult with their international bankers about bank policy.
LCL cargo means less than container load; [Pakistan Customs Rules, 2001]
lighter: Abarge towed bya tugboat. Used mostly in harbours and inland waterways.
liner: An ocean vessel used on a particular route with regular sailings.
Local Sales Tax Office means the office of Superintendent of Inland Revenue or such other office as the Board may, by notification in the official Gazette, specify; [The Sales Tax Act, 1990]
LRO means Local Registration Office established in the Collectorate of Sales Tax or Regional Tax Office (RTO) having jurisdiction; [Sales Tax Rules, 2006]
LTU means the Large Taxpayer Unit having jurisdiction; [Sales Tax Rules, 2006]