Exporters have proposed to Prime Minister Imran Khan for restoration of sales tax zero-rating regime in budget (2020-21) following inability of Fully Automated Sales Tax e-Refund System (FASTER) to directly credit refunds into the exporters' bank accounts within 72 hours.
Shabir Ahmed Patron-in-Chief Pakistan Bedwear Exporters Association (PBEA) had refuted government's claim of issuing Rs56 billion sales tax refunds post-zero-rating withdrawal.
Shabir Ahmed Patron-in-Chief Pakistan Bedwear Exporters Association (PBEA) told Business Recorder that the figure of Rs56 billion payment of refunds covers claims filed in the past periods and not after imposition of sales tax on export sectors from July 2019 onwards. Thus, the major component of the paid amount is related to the pending claims of past years now cleared under 'Faster'.
The whole amount of Rs56 billion is not related to the period of July 2019 and onwards, he opined.
He said that there is a huge difference between the amount of pending refund claims and those actually issued by the government under the FASTER system. Recently, Advisor to the Prime Minister on Finance Dr Abdul Hafeez Shaikh had informed Federation of Pakistan Chambers of Commerce and Industry (FPCCI) that government had already issued sales tax refunds to exporters to the tune of Rs56 billion through the "Faster System". Out of this, Rs40 billion refunds had also been issued out of Faster System and Rs3 billion additional refunds were to be paid by the end of the current month.
We would once again demand and request the Prime Minister to restore zero-rating of sales tax for export sectors as this 72 hours 'Faster' experiment which was started in July 2019 remained unsuccessful and directly affecting exports of the country.
Shabir Ahmed stated that the payment of Rs56 billion refunds through 'Faster' included those refunds which were pending for the last many years and clearance does not include refund claims filed post withdrawal of zero-rating regime from export sectors.
The association welcomed Hafeez Sheikh statement that the government is actively resolving the liquidity related issues of business community by clearing all outstanding tax refunds on fast-track basis. But whether the FBR is providing accurate and authentic data of refund payments after imposition of sales tax on export sectors, he questioned.
When sales tax was imposed on export sectors, the FBR announced in a press conference in August 29, 2019 that the FBR has fulfilled the promise of the business community for speedy payments of refunds under the new system. After withdrawal of the sales tax zero-rating facility on local sales, the major apprehension of the business community was timely payment of refunds. The issue has been timely addressed through implementation of the system of FASTER.
The FBR had also announced that FBR will pay sales tax refunds of around Rs 15-20 billion per month to the five export-oriented sectors through the FASTER system. When SRO.1125 was in practice, the FBR had paid monthly sales tax refunds of Rs 4-5 billion. Now, it has been estimated to pay Rs 15-20 billion per month through FASTER. FBR has pending sales tax refunds of around Rs 170 billion including deferred claims. The figure of pending claims of Rs 496 billion is not correct.
Patron-in-Chief PBEA was of the view that the Faster system has not been working since May 1, 2020 and the refund claims are still pending since January 2020 or even before in many cases.
Now the exporters are caught in a situation where they are unable to pay wages to their workers and payments to the suppliers.
"We would request the Advisor to immediately order the FBR to issue Sales Tax Refunds and also request the Advisor to give an authentic bifurcation of refunds paid pertaining to the past period and those paid after withdrawal of zero-rating regime."
On one hand Pakistan is fighting with coronavirus and on the other, exporters' working capital is blocked. How the exporters can keep the momentum of exports and generate foreign exchange.
The exporters had higher expectations from the PM Imran Khan for resolution of the issues, but the exporters cannot find much difference between the past refund treatments and now period.
Shabir Ahmed requested PM for immediate release of pending refund claims as well as restoration of zero-rating facility.
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