PTEA criticises non-payment of tax rebates and duty drawback

Claims RPOs issued to several exporters being rolled back by FBR before payment deadline

FAISALABAD: The Pakistan Textile Exporters Association (PTEA) has expressed concern over non-release of funds for payment of incentives announced under the Prime Minister’s export promotion package.

PTEA Chairman Ajmal Farooq claims that even the Rs4 billion earmarked in the new federal budget has not been released despite duty drawback claims of Rs10 billion being submitted at the State Bank of Pakistan. The total export promotion package consisted of incentives worth Rs180 billion in the form of duty drawbacks and sales and customs tax rebates.

“Rebate and drawback claims of Rs200 billion have accumulated,” Farooq said, adding that the situation is creating a severe liquidity crunch for exporters which is affecting both the production capacity of the sector and its growth.

“Textile industry, despite contributing eight percent to the country’s GDP, still remains low on the government’s economic priority list,” Farooq said while deploring the low importance being attached to the sector. Farooq further said that Finance Minister Ishaq Dar had announced payment of all pending sales tax refund claims, where Refund Payment Orders (RPOs) had been issued before April 30, 2017, but not after August 14, 2017. “After making some payments, a large number of RPOs have been rolled back since then,” he claimed, adding that the move has deprived exporters of their working capital.

Referring to previous budget speeches, he said that Dar made an announcement for payment of outstanding refunds of exporters but no funds were released and the situation remained unresolved.

“Rs6 billion was allocated for the sector under the textile policy of the time but only Rs4.84 billion were released,” Farooq lamented. “Likewise, in the 2015-16 budget, Rs6 billion were allocated and in 2016-17 another Rs6 billion were allocated but were never released.”

PTEA Vice Chairman Muhammad Naeem said inordinate delays in payment of refunds have exacerbated problems for exporters who already face high costs of doing business and energy shortages.

Published in The Express Tribune, July 26^th, 2017.

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