NA body for win-win solution on zero-rated regime issue

ISLAMABAD: The National Assembly’s Standing Committee on Commerce and Textile Tuesday advised the Commerce Ministry to find some win-win solution of the issue related to zero-rated regime of five export-oriented sectors.

The meeting of the committee was chaired by Syed Naveed Qamar while among others it was attended by committee members and officials from Ministry of Commerce.

After listening to the representatives of five zero-rated exports-oriented sectors and the stance of commerce ministry, Naveed Qamar advised Advisor to Prime Minister on Commerce and Textile, Razzak Dawood to find some middle ground that would be beneficial for both government and Industry.

He said that a solution should be suggested keeping in view to help continue growth and stability and also facilitate textile sector.

Earlier, the representatives of five zero-rated exports-oriented sectors, the committee about the implication of eliminating zero rated regime for these export sectors.

These representatives pleaded for continuing zero-rated tax regime for these sectors, including textile, leather, sport goods, surgical and carpets.

Muhammad Jawed Bilwani, Chief Coordinator, Five Zero Rated Export Sector and Chairman Pakistan Apparel Forum demanded the government that the Zero Rating for Five Export Oriented on basis of “No payment No refund system” should be continued and converted into an Act from the existing SRO system.

Bilwani informed the committee that the export industry was facing several liquidity crunches as more than Rs 200 billion refunds of sale tax, custom rebate, withholding tax, Drawback of Local Tax and Levies and Duty Drawback of Taxes were already held up with government.

He informed the committee that discontinuation of “No payment No Refund” regime will further stuck up 14 percent of exporters liquidity in every 4 months as one shipment takes 4 months for completion which means 42 percent exporters liquidity would stuck up in a year.

He said that the total export of these five zero rated export sector were recorded at $23.221 million last year (2017-18).

Meanwhile, Advisor to the Prime Minister on Commerce, Abdul Razaq Dawood said that the Statutory Regulatory Orders (SROs) of five zero rated export sector was removed on the advice of the Federal Board of Revenue (FBR) and Finance Division.

He said that FBR holds that the sale tax exempted raw material was being used in other sectors which are not part of zero rating.

In addition, the local sale of these sectors was RS1200 billion and business community was paying just RS 6 to 8 billion of tax on local sale.

He said that FBR had also ensured that there would be no difficulty in payment of refund and it would announce a complete plan for smooth payments on the pattern of China and Bangladesh to minimize the period of refund payment.

It is pertinent to mention here that the government in 2005 had introduced zero rating facility for the export-oriented industries namely Textile, Carpet, Sport Goods, Surgical and Leather to solve the issues.