FTO to help clear sales tax refunds of exporters

Tells businessmen to bring refund complaints to ombudsman office

ISLAMABAD: Federal Tax Ombudsman (FTO) Mushtaq Ahmad Sukhera has assured exporters that he will use his powers to help release sales tax refunds worth billions of rupees that have been stuck for the past many years.

Talking to textile exporters at the Pakistan Hosiery Manufacturers Association (PHMA) House, Sukhera said, "Sales tax refund complainants should come to the FTO to launch their individual complaints," adding that the FTO would also take suo motu action to resolve the issue.

"To discourage imports we have devalued the rupee against the US dollar, to mitigate the current account deficit we have borrowed dollars, however, due to different goals of institutions, the exporters are facing problems instead of being facilitated," he added.

In the last budget, the Federal Board of Revenue (FBR) suggested that by removing the zero-rated status for the export sector, the national exchequer would earn Rs80 billion, he said. "We ended zero-rating and I don't want to comment on whether we will achieve the target or not. But the decision is having implications."

Had the government imposed a 5% flat tax across the board instead of 17% sales tax, it would have been a better decision, he remarked.

In order to expedite the refund process, the FBR has introduced the Fully Automated Sales Tax e-Refund (FASTER) System, which would process refund applications without human interaction.

Talking about the new system, the FTO said the FBR launched FASTER system without any trial and did not even put in place a feedback system to make improvements.

"The FTO has the mandate under which it plays its role, however, it also can make recommendations if it sees any malfunctioning system. Therefore, the exporters should come to the FTO Karachi Office to discuss their issues," he said.

Speaking on the occasion, the exporters said the new FBR system encountered a large number of technical glitches but they could not do anything about it.

"The system shows only a one-liner objection for more than one objection and does not explain the precise reason for the delay in refund," an exporter said.

It was suggested that the FBR should establish a separate consultation department, which should advise what steps a particular exporter should take to get the issues resolved.

They suggested that the system should give details like the Web-Based One Customs (Weboc) system of Pakistan Customs and provide detailed information. For example, it should inform which one of the 10 traders it could not verify in the refund claim instead of making a generic reply to all the issues.