Textile sector’s anguish: Exporters still await sales tax refunds
Irked by slow process, disturbed due to liquidity crunch, says chairman.
KARACHI:
Pakistan Hosiery Manufacturers & Exporters Association Southern Zone Chairman Muhammad Babar Khan said that the slow clearance of sales tax refunds from Federal Bureau of Revenue (FBR) is creating severe cash flow problems for the value-added textile sector.
“Huge amount of liquidity of the exporters of the value added textile sector is still blocked with the FBR causing immense problems to struggling exporters,” he said.
He said millions of rupees of sales tax refunds and customs rebates payable to the exporters are held up with FBR despite firm assurances given by Finance Minister Muhammad Ishaq Dar that all refunds would be duly cleared.
However, according to PHMA press release, FBR has released cheques against Refund Payment Orders (RPO’s) till June 30, 2014. Refund claims submitted after June 30, 2014 are the only ones pending.
It has also been learnt that Finance Ministry has issued instruction to FBR for processing only fresh refund claims submitted till June 30, 2014. No instructions were issued for clearance of the old pending claims.
Khan said that the previous government issued RPOs after which the payment was cleared promptly, but now though the RPOs have been issued since four to five months, no cheques have been released.
“This is alarming and only reflects financial weakness of the government,” he said.
He lamented that the value-added textile exporters are battling hard for their survival in the global market, with problems such as severe competition from neighbours. Hence, this liquidity crunch will further worsen prospects and lead to disastrous consequences.
He fervently appealed to the finance minister to issue immediate instructions to the FBR for the speedy release of cheques against all the pending Sales Tax Refunds and Customs Rebate Claims.
He also proposed that the government should revert to the “No Payment No Refund” regime for the textile export sector because exports are a great source for earning valuable foreign exchange. The collection of 2% sales tax and then refunding it is not only futile but involves large number of FBR personnel and their precious time, which can otherwise be utilised in bringing more people in the tax net to increase revenue.
Published in The Express Tribune, October 3rd, 2014.
Pakistan Hosiery Manufacturers & Exporters Association Southern Zone Chairman Muhammad Babar Khan said that the slow clearance of sales tax refunds from Federal Bureau of Revenue (FBR) is creating severe cash flow problems for the value-added textile sector.
“Huge amount of liquidity of the exporters of the value added textile sector is still blocked with the FBR causing immense problems to struggling exporters,” he said.
He said millions of rupees of sales tax refunds and customs rebates payable to the exporters are held up with FBR despite firm assurances given by Finance Minister Muhammad Ishaq Dar that all refunds would be duly cleared.
However, according to PHMA press release, FBR has released cheques against Refund Payment Orders (RPO’s) till June 30, 2014. Refund claims submitted after June 30, 2014 are the only ones pending.
It has also been learnt that Finance Ministry has issued instruction to FBR for processing only fresh refund claims submitted till June 30, 2014. No instructions were issued for clearance of the old pending claims.
Khan said that the previous government issued RPOs after which the payment was cleared promptly, but now though the RPOs have been issued since four to five months, no cheques have been released.
“This is alarming and only reflects financial weakness of the government,” he said.
He lamented that the value-added textile exporters are battling hard for their survival in the global market, with problems such as severe competition from neighbours. Hence, this liquidity crunch will further worsen prospects and lead to disastrous consequences.
He fervently appealed to the finance minister to issue immediate instructions to the FBR for the speedy release of cheques against all the pending Sales Tax Refunds and Customs Rebate Claims.
He also proposed that the government should revert to the “No Payment No Refund” regime for the textile export sector because exports are a great source for earning valuable foreign exchange. The collection of 2% sales tax and then refunding it is not only futile but involves large number of FBR personnel and their precious time, which can otherwise be utilised in bringing more people in the tax net to increase revenue.
Published in The Express Tribune, October 3rd, 2014.