Review of Finance Bill 2020: Exporters urge NA body chairman to invite stakeholders

ISLAMABAD: Exporters have urged the chairman National Assembly Standing Committee on Finance to invite the stakeholders during the review of the Finance Bill, 2020, to have a real picture of the sales tax regime, governing export sectors specifically the sales tax refund payments viz-a-viz the Federal Board of Revenue (FBR)'s claim of payments in 72 hours.

In a statement Muhammad Jawed Bilwani, chairman, Pakistan Apparel Forum and Chief Coordinator and former chairman, Pakistan Hosiery Manufacturers and Exporters Association (PHMA) here on Tuesday, strongly reacted to the reported statement of the FBR Member IR Policy Dr Hamid Ateeq Sarwar before the Senate Standing Committee on Finance on sales tax zero-rating regime.

Jawed Bilwani expressed his strong reservations on the statement of the FBR Member IR Policy before the Senate Standing Committee on Finance, that "there was not a single example in the entire world where domestic sales tax was zero rated. Pakistan was the only country in the world, which was offering sales tax zero rating facility on domestic supplies of leading export sectors."

Conveying reservations, Bilwani added that the Member IR Policy FBR had ignored that Pakistan was also the only country in the world whereby sales tax refunds, in the hands of the FBR, were deliberately delayed for unnecessary reasons and kept in the government's kitty due to which exporters' precious liquidity was stuck for months.

Bilwani articulated that with the united efforts of value-added textile export sector the government decided to declare zero rating on the GST for five zero rated sectors, so that the exporters liquidity should not be unnecessarily held with the FBR, and the exporters shall keep their energy focused to enhance exports.

Pertinent to mention here that before zero rating, flying invoices and bogus GST refunds were rampant, which after declaration of zero rating were controlled and eliminated.

Contrary to Bangladesh or China Refund Model whereby exporters receive their refund payment promptly after submission of the GD, government launched FASTER by which sales tax refunds to be paid within 72 hours electronically.

In first five to six months, the FASTER system functioned below par and remain inactive.

Later, the FBR processing claims manually and SBP paying refund on advice of the FBR.

Exporters who have promptly filed their claims of sales tax refunds have, up to March 2020, received only 60 percent of their pending sales tax refund with the government.

However, 40 percent of the sales tax refund amount of exporters is still pending under carried forward or deferred.

Approximately, 30 percent of exporters have not received a single rupee under the FASTER System. Despite submission of sales tax returns and "Annexure H", which was duly approved and the RPOs issued by the FBR 40 days = 960 hours before to-date, still refunds have not credited to exporters accounts, which was supposed to be released in 72 hours.

Bilwani asked Member IR Policy to give a single example of the FBR for releasing refund in 72 hours during the first quarter of FY 2019-2020 or till date.

Unsolved issues between the PRAL and Inland Revenue are also a reason causing delays in refunds.

We are surprised how the FBR will address the problems of exporters when it is unable to resolve its internal problems, Jawed Bilwani added.