Textile exporters Tuesday termed escrow account as the only solution to timely payment of exporters' GST refunds. Addressing a joint press conference, Pakistan Bedwear Exporters Association (PBEA) Chairman Shabbir Ahmad and Towel Manufacturers Association of Pakistan (TMA) Chairman Farrukh Maqbool, both representing the value added textile export sector of the country maintained that creation of dedicated head (escrow account) will guarantee the timely release of refunds for the specific export-oriented sectors, adding that it will also restrict the refund amount of exporters to be used for any other purpose.
They hoped this system, if introduced, will ensure refunds of exporter's claims within 72 hours as committed by the FBR.
However, they said it is to their surprise that the Federal Board of Revenue (FBR) is concerned about the working modalities of the escrow system.
They said, in their letters sent to the Chairman FBR, they have proposed a foolproof system through which the FBR, the concerned association(s) of the specific export sector, and a reputable chartered accountant firm will monitor the escrow account to ensure accountability.
The associations mentioned that the System Generated RPOs have already been issued after necessary verification of the refund claims.
They said FBR officials concerned in their Press Conference of 29th August and reported in the press on 30th August 2019, seemed to indicate that they will again need to get the verification done due to Escrow account. FBR seems to be using this excuse as a tool to delay/use the funds collected from the Exporters, they alleged.
The Chairmen of TMA and PBEA said that the "Faster" or any other system on earth will only work if there are funds available. Previously no refund system has worked because the funds were always considered a part of the govt.'s revenue stream, and at the time of the refunds, these funds were never made available since they were being used for other government expenditures.
Even in the current scenario the Governments, due to the unavailability of the funds, have issued 3 year Bonds to the exporters against their GST refunds pending from the previous years.
The chairmen said that discounting mechanism has also not been made clear for these bonds, and the exporters are stuck with these bonds till there is further clarification from the Government to the banks and other financial institutions.
They said even after issuance of bonds, huge amount of refund still unpaid.
They asserted that the FBR is the custodian of exporter's refunds, and should ensure total visibility/transparency of these funds at all times.