An undue delay in processing of sales tax refunds is adversely impacting the export cycle as exporters’ liquidity has already taken a strong hit from the impact of Covid-19 outbreak.
Expressing concern over the delay, Pakistan Textile Exporters Association (PTEA) Chairman Sohail Pasha said the government must take immediate measures to ease the financial stress and ramp up export growth.
He said timely payment of refunds was a major issue and despite commitments, the Federal Board of Revenue (FBR) failed to make payments to major export sectors within 72 hours as the processing of refund claims through the FASTER system had been halted for the past 30 days.
He pointed out that sales tax refunds had accumulated to billions of rupees and exporters were facing a severe financial crunch.
“This situation has created immense problems for textile exporters and their liquidity has taken a dual hit - once after the withdrawal of zero-rating regime, resulting in the piling up of sales tax refunds, and then from the adverse impact of the pandemic.”
Pasha called for undertaking infrastructural changes in the refund system for the speedy processing of claims.
The PTEA chairman suggested that refund claims of exporters should be processed on the basis of filing Annex-C (sales) by the suppliers and the same may not be linked with the submission of returns as the suppliers could not make any changes in particulars of sales claimed by the respective buyers.
He called for significantly enhancing the amount of penalties for late filing and stopping unnecessary extension in the deadline for submission of monthly tax returns.
PTEA Vice Chairman Haris Yousaf was of the view that the virus-fuelled lockdowns all around the world had caused an adverse demand shock, which substantially impacted Pakistan’s export orders.
Resultantly, a significant dip in textile exports had been witnessed and the exporters were suffering heavy financial losses, he added.
He urged the government to restore the zero-rated regime for the five major export sectors and plan long-term measures to cope with the situation.
He demanded relaxation in the condition of 10% increase in export performance for entitlement to 50% increase under the Duty Drawback of Taxes (DDT) scheme.
In order to encourage domestic and foreign investors to make investment in the country at this critical time, he emphasised the need for developing a strategy to protect the pace of economic and trade progress of Pakistan from the likely impact of global economic slowdown.
Published in The Express Tribune, July 8th, 2020.
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