Exporters have appealed to Prime Minister Imran Khan to immediately intervene to resolve the critical issue of refund payments through the 'FASTER' system by creating a dedicated account for sales tax refunds.
In a communication to PM, Chairman South Circle Sindh-Balochistan Towel Manufacturers Association expressed serious concern over blockage of refunds under the FBR's 'Faster' system. The creation of the dedicated sales tax account is the only solution to resolve the issue.
Prime Minister Imran Khan should immediately direct the FBR Chairman to brief on the status of refund payments through 'Faster' system because withdrawal of sales tax zero-rating was linked with the speedy payment of refunds. The entire system has been compromised following non-payment of refunds under the 'Faster' system.
He raised question that why the FBR is using their money as revenue for their own purposes.
When contacted, Chairman Pakistan Bedwear Exporters Association Shabir Ahmed stated that the refund system of payment in 72 hours has been totally collapsed and exporters are not getting any refunds since last nine months against the FBR's claims of 72 hours. Even if refund amount is sanctioned no refunds are issued and even refund payment orders (RPOs) either not issued or no payment is made against issued RPOs.
Exporters have apprehended that the refund amount is being used by the government as revenue to show inflated revenue collection.
Chairman Pakistan Bedwear Exporters Association stated that Pakistan would continue to enjoy tariff preference in EU under GSP Plus. European Union has provided unilateral trade concession to Pakistan.
Chairman Circle Sindh-Balochistan Towel Manufacturers Association said that since 1st July 2019 sales tax imposed on all raw materials and others items @ 17% with the aim to refund within 72 hours on filing of Ann-H. While experiencing in filing and getting refund under newly introduced FASTER system it has been noticed with great concern that Para (2) of Rules 29 Risk Management System are not seems to have been running.
For the refund claims processed through 'FASTER' or expeditious refund system (ERS), the part of the refund claim that is not verified or not found admissible shall be subjected to system validation checks every week and RPO shall be generated for the amount found valid during each validation check. After every validation process, the information regarding RPO generated, if any, as well as the objections shall be communicated by the system to the refund claimant and also to the concerned RTO or LTU for information. RPO as generated shall be communicated to the State Bank of Pakistan for payment in the aforesaid manner. After eight validation checks, including the initial one, if any amount still remains un-cleared, the same shall then be processed under 'STARR' channel.
In view of above, the FASTER system should have rotate its validation checks every week and RPO be generated for the amount found valid. But we have not seen any partial payment. RPO are being issued while the Refund Claim from July to Dec has been proceed. Resultantly, the deferred amounts from original claims are still pending and increasing every month, he said.
After a passage of six months, clarification issued by the FBR on its portal revealed that at the end of January 2020 it was informed that now FASTER system is fully operational and instructed to file Annexure-H in seriatim, i.e; 1st July 2019 and then in sequence to Dec 2019.
It was claimed that the rejected claim with anomaly has been rolled back which is not true. The information also says that deferred claims of Jul-19 to Oct-19 have also been processed on 26-01-2020 which is not true as our majority of member couldn't receive a single penny, he said.
However, the claimant file return and they don't know the status of their sales tax refund as there is no option available to check the same, he said.
Muhammad Haroon stated that it is clear that none of parameter has been fixed or discussed with stakeholders and policy announce in hefty manner so when an application rejected/differed the applicant does not know why it was. Consequently, the applicant is left guessing what went wrong.
Many factors behind declining exports are one of the major factors non-refunds of sales tax and non-Cooperation of the FBR to resolve issue. When issue rose they remain silent and due to which from July 2019 exporters are under tremendous financial crunch and started closing one shift may be led to complete closure or bankruptcy of SME sectors for which the FBR is solely responsible.
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