Incentive: Rice exporters demand zero-rated tax regime

Are facing liquidity crunch as huge tax refund claims are stuck with FBR

LAHORE: The Rice Exporters Association of Pakistan (REAP) has asked the government to award the second-largest export industry zero-rated sales tax status as exporters are facing liquidity crunch in the face of pending tax refund claims.

“REAP members are terming the liquidity crunch a major stumbling block in the way of improving exports, as huge amounts are still stuck in refund claims with the Federal Board of Revenue (FBR), squeezing finances and causing cash-flow problems,” said REAP Chairman Muhammad Shafique.



Praising the restoration of zero-rated tax regime by the prime minister for five sectors - textile, leather, carpet, sports goods and surgical goods, he called for inclusion of the rice exporters in the list.

“Rice exporters contribute a major share to the country’s export earnings and are providing direct and indirect employment to millions,” he said.

“Rice is the second largest export commodity, but despite earning $2 billion annually, we are not being given benefits while exporters of other commodities are facilitated.”

The association has already written letters to the finance minister and commerce minister, pressing them to count the sector among zero-rated exporting industries and exempt the rice exporters from sales tax and income tax on utility services.

Shafique pointed out that the exporters had been facing unprecedented challenges for years and consequently their capacity had been severely impaired. “Exports, both in terms of volume and value, could not pick up pace and currently stand below the target. Absence of the zero-rated facility and imposition of sales tax would be detrimental to the business activities,” he remarked.

Published in The Express Tribune, February 19^th,  2016.

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