Exporters reject govt's bond float plan for tax refunds

Ask government to take businessmen into confidence first

KARACHI: Textile exporters have voiced strong reservations about the government announcement that it has planned to float security bonds for clearing tax refund claims of businessmen and have urged the government to take the business community into confidence in that regard.

They made the demand at a press conference organised at the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) office on Monday.

Majority of the textile export industries comprise small and medium enterprises (SMEs) which prefer personal investments rather than borrowing from banks, hence the businessmen should be consulted beforehand, they emphasised.

"If the SMEs are paid in cash, it will be viable for them to keep running their businesses," the exporters argued. "They will be able to purchase raw material at the most competitive prices by paying cash."



The exporters expressed dismay over the inordinate delay in releasing tax refunds and demanded that the government immediately clear the backlog in one go.

Tax refunds of the exporters have been stuck for a long time. These are to be paid under the Duty Drawback of Taxes (DDT) scheme of the Prime Minister's Export Package, Drawback of Local Taxes and Levies (DLTL) scheme, in sales tax refund, customs rebate and withholding tax.

"The government continues to delay refund payments which clearly reflects its lack of interest in promoting the textile industry," they lamented.

Giving statistics, they revealed that tax refunds of Rs127.35 billion belonging to textile exporters had been halted by the government, of which Rs61.02 billion was of the apparel sector alone.

They voiced hope that following the government's disbursement of refund claims, the exports of the country would swell and additional billions of rupees were expected to be earned.

"The release of tax refunds will not only boost export activities but will also bolster the entire supply chain and allied sectors," they said. "This will also assist the textile export industry in creating more jobs in line with the government's vision."



They recalled that during a visit of the member Customs and Federal Board of Revenue (FBR) officials to the PHMA in October 2018, they had agreed that customs rebate would be paid electronically with export proceeds, effective January 2019 onwards.

However, the plan was still far from reality as a nine-month backlog was prevailing, they informed the media and demanded immediate automation of the system.

Reacting to the long withheld sales tax refunds, the textile exporters expressed dissatisfaction with the FBR over 30% deferred claims and cases awaiting adjudication for the past seven to eight years.

They pointed out that 99% of decisions were announced in favour of exporters and called for referring such cases to the Federal Tax Ombudsman for immediate disposal in line with the timeframe.