High tax burden leads to closure of industrial units

Exporters criticise govt’s business policies that make refunds difficult

ISLAMABAD: Textile exporters have lamented that they have been burdened with several taxes including 17% general sales tax (GST) due to which the textile industry of Faisalabad has mostly been shut down.

During a meeting of the Senate Standing Committee on Textile, the exporters criticised business policies of the government and maintained that it had made the refund claim form extremely difficult so that no one could fill it properly.

The committee met on Thursday with Senator Mirza Muhammad Afridi in the chair. During the meeting, Senator Shibli Faraz revealed that imports of information technology (IT) products were being subjected to under-invoicing, which was paving the way for money laundering.

He suggested that it should be made mandatory for the importers of IT accessories to furnish original documents of their shipments. “About $400-500 million is being laundered under the garb of IT imports through under-invoicing while the FBR is facing an annual loss of Rs8-9 billion,” he said.

FBR officials explained that the government had fixed benchmark prices for certain computer accessories while benchmarks for other products would be announced soon.

They maintained that about 20 to 25 import products, other than IT accessories, were reportedly being under-invoiced and investigations were under way. They pointed out that these problems stemmed from transit trade and they had requested the Customs authorities to address such issues.

During the meeting, the exporters criticised government authorities, especially the refund payment system.

Present in the meeting, Pakistan Apparel Forum Chairman Javed Bilwani pointed out that the government had claimed that it would make swift refund payments like Bangladesh after the end of the zero-rated system but the amount was not disbursed yet.

“We were told that refunds will be released within 72 hours,” he said. “Now, we are being given a time period of 25 days for collecting refunds.”

He added that as a consequence, the exporters faced shortage of capital and many were closing down their business due to lack of funds.

The FBR officials claimed that they had disbursed Rs260 million out of Rs1 billion worth of refund claims.

Committee Chairman Afridi ordered FBR officials to address genuine concerns of the traders and present their recommendations in a meeting on October 18. On the issue of under-invoicing, he was of the view that smuggling was on the rise due to the Afghan Transit Trade arrangement. “Elements in Afghanistan are making use of the transit trade to tarnish the image of Pakistan,” he said.

Published in The Express Tribune, October 4^th, 2019.

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