PBEA seeks withdrawal of SRO 98(1)/2013

February 16, 2013

RECORDER REPORT

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Showing its strong reservations over SRO 98(1)/2013 which according to Pakistan Bedwear Exporters Association (PBEA), has made the exporters Sales Tax Withholding agents, PBEA has demanded Federal Board of Revenue (FBR) to withdraw the SRO 98(1)/2013.

In a letter sent to Ali Arshad Hakeem, Chairman FBR on February 13, 2013, Shabbir Ahmed, former chairman PBEA has said that the new SRO, has made exporters Sales Tax Withholding agents by amending Sales Tax Special Procedure (Withholding) Rules 2007.

According to the letter, the SRO 98(1)/2013 has extended the scope of withholding agent for purpose of Sales Tax to exporters. This SRO was issued on February 14, 2013 and made applicable without any prior notice or prior consultation of the business community in general and exporters in particular. This is not only unfair but reflects anti-business attitude of Federal Board of Revenue.

On one hand, billions of rupees of Income Tax, Sales Tax, Custom refunds are stuck up with FBR and on the other hand FBR is bent upon putting more and more responsibilities and burdens of tax collections on the taxpayer. This responsibility of acting as withholding agent for Income Tax, Sales Tax and FED on exporters is totally un-remunerated and is costing us a lot of money and resources in shape of keeping dedicated staff, deducting and filing challans, issuing certificates etc.

Around 68 percent of the total direct tax collections are through tax withholding regime and FBR does not give any compensation for this to the business community. The inconvenience does not stop here; tax withholding agents (exporters etc) accounts are frequently summoned for audit of withholding of taxes by the tax department. The role of FBR should not be only to collect taxes but the real role of FBR in our opinion should be to create an enabling environment through policies that enhances export, trade, commerce, industrialisation and thus job creation.

"We would like to state that anti-business policies and stance of FBR is a significant contributory factor for business and industries leaving Pakistan and stagnant growth of industrialization in the country. "This SRO which has been issued without prior consultation will further lead to decrease in exports. We request you to kindly withdraw the application of the said SRO 98(1)/2013 to exporters," it added.