Export sector: FBR yet to work out modalities for refunds, says Bilwani

Federal Board of Revenue (FBR) has yet to work out modalities for refunds to the export sector, said Chairman Pakistan Apparel Forum, Javed Bilwani. There is also no provision for refund in FBR's newly devised electronic Refund Processing System (RMS) hence any increase in the rates of SED will have an adverse impact on the cost of doing business of the export sector, Bilwani said while talking to Business Recorder on Thursday.
He said, SED was first introduced as ad hoc revenue generating measure through notification 655(I)/2007 in July 2007. However, since then it has become a permanent part of the FBR's revenue collection drive through duties and taxes and is unlike input tax adjustment at different stages in VAT mode.
He stated it is indeed an irony that though the notification clearly allows refund to the input consumed in subsequent export, the export industry has not got a single penny of refund on this account since last three years, despite the fact that they are regularly claim the same in their monthly sales tax return cum refund application. Bilwani stressed the need for finding out the reason for non-payment of refunds of SED to exporters and urged prompt refund payment on this overdue account.
According to sources in the textile industry, the new textile policy (2009-14) may not achieve the desired results as the government has failed to fully implement it. In the new policy, the government has envisaged boosting textile export to $25 billion in five years, however it appears difficult as the policy is not fully implemented, they observed.
Key initiatives of the policy included creation of Textile Investment Support Fund (TISF), Technology Up-gradation Fund (TUF), Infrastructure Development, Skill Develop-ment, zero rating of exports, tax-free import of machinery and Rationalisation of tariff structure, restructuring and reorganisation of the textile sector including drawback of local taxes, refund of past R & D claims and Magnetisation of PTA.
The policy also envisages removing regulatory bottlenecks ie market access, marketing support, export house scheme, marketing insurance scheme and improving Information and communication technology. However after the passage of one and half a years, SROs of only 30 percent of the total announced schemes have been issued while the remaining are yet to be issued by the concerned departments.
Under the new textile policy, the government had announced that 60 percent of R & D pending dues of last year would be paid to the textile exporters. However, the registration process for obtaining past dues is so cumbersome that only ten percent companies would qualify for R&D, textile exporters added.
Similarly the government has failed to introduce the new bill 'Textile Development and Promotion bill', which was to monitor the implementation of the textile policy (2009-14) and to ensure accurate statistics of production capacity, exports and total number of textile units in the country. The proposed Textile law would require all the textile units functioning in the country to register with Ministry of Textile Industry as only registered textile units would get incentives announced in the Textile Policy framework, however it failed to implement this and the industry is not getting the promised incentives.
Similarly the government had announced in the textile policy to provide regular supply of gas and power to the textile industry, however it failed to provide these facilities resulting in a huge loss to the industry. To a question, a textile exporter said the proposed increase in the rate of special excise duty (SED) from one to 2.5 percent would not have any impact on the textile sector as the industry was exempted from both the federal excise duty and one percent special excise duty.
He said that presently the textile sector is not subjected to SED or Federal Excise Duty (FED). However, if there is any proposal to increase the rate of special excise duty (SED) from one to 2.5 percent, it would definitely be applicable for those sectors already subjected to the SED. Therefore, the proposed enhancement in the rate of the SED would not have any negative impact on the textile sector.