Exporters suffer as tax exemption certificate remains evasive

PHMA secretary says delays on the part of FBR appear deliberate

KARACHI: Irked by the delay and inefficiency of the system, exporters have lodged complaints with the Federal Board of Revenue (FBR) after failing to receive withholding tax exemptions on the import of machinery that were extended under a statutory regulatory order (SRO).

Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Secretary General Khadim Rasool registered the complaint with FBR Chairperson Rukhsana Yasmin, stating that exporters are facing difficulty in acquiring the withholding tax exemption certificate granted under SRO 947(I)/2008.

Under the tax mechanism, exporters have to apply online to avail the exemption through the Iris - the system FBR uses for electronic form submissions and tax-related matters.

“A large number of our member exporters have complained that despite the lapse of several days, commissioner Inland Revenue, zone-VI, corporate regional tax officer (RTO), Karachi has not been issuing exemption certificates,” Rasool wrote in the complaint.

Close to half of Pakistan’s exporters are due to receive the tax exemption certificate from commissioner Inland Revenue Zone-VI, corporate RTO on import of machinery, according to an industry official.



Rasool said the facility to apply online for an exemption certificate was introduced to save time and expedite the process, enabling exporters to import machinery without the hassle of balancing, modernisation and renovation (BMR), and enhance efficiency.

“(However) it appears that such delays are being deliberately caused for some ulterior motives, as the commissioner also demands a hard copy of the online request, which is not understandable as the Iris is a centralised system, providing access to FBR officials and to maintain a paperless environment,” he added.

Exporters fall under the final tax regime - they often end up paying more taxes than they are supposed to, and hence, apply for a refund. To avoid further tax deduction, exporters then apply for tax exemption. “Consequently, when demurrages (charges for detaining a shipment) are charged due to excessive delays, exporters are compelled to pay the input tax to get their machinery released,” he said.



“We request the FBR to direct the relevant official to promptly respond to the genuine and legitimate requests of exporters,” he added.

Published in The Express Tribune, August 19^th, 2018.

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