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Exporters calls for fragmentation of payment, refund system of sales tax

Exporters calls for fragmentation of payment, refund system of sales tax

KARACHI: Pakistan Apparel Forum and the zero-rated export sectors have called for fragmentation of the payment and refund system of sales tax for exports to save precious time. Furthermore, exporters have stressed for continuity and reforms in supply of gas, water and power, instant tax refunds and implementation of 27 conventions required by EU among other demands.

In their recommendations addressed to the Prime Minister, the exporters stated that ‘no payment no refund’ system for exports would save time of the Federal Board of Revenue as well as of exporters.

According to the exporters, throughout the world exports are zero-rated because they are a great source of valuable foreign exchange. With this in view, the government had introduced the ‘no payment no refund’ system in 2005. Different FBR chairmen and finance ministers appreciated this facility for not only generating revenue but also stopping fake refunds. However, just 24 days before the caretaker government took over the previous government issued statutory regulatory orders to start the payment and refund system.

The recommendations were made to reap the maximum benefits of the GSP plus facility granted to Pakistan by the European Union. The recommendations have advocated separate status and top priority to export oriented industries in the supply of power, gas and water as this would lead to increased production.

The exporters also recommended that the power and gas as well as water tariff should be fixed for one year and this must be prescribed according to tariffs available in the other competing countries since this would keep the cost of doing business at bay and enable exporters to face global competition.

They demanded of the government to reimburse all refunds to exporters at the time of export proceed realisation. It was also proposed that all refunds relevant to customs rebate, sales tax on packing materials, special excise duty should be released to the exporters at the time of export proceed realization. This is a longstanding proposal for the benefit of the exporters and the nation.

One-window operation of federal and provincial agencies is surely most essential for the export-oriented industries as this would finally relieve the exporters.

“To boost and double our exports, let all our exporters be free from interference by multifarious agencies to enable the exporters to concentrate on their marketing and production and meet stringent compliance of foreign buyers and shipment deadlines. A minimum percentage for manufacturers-cum-exporters must be set and deducted at one source at the time of export proceed just like export development fund,” the recommendations noted.

It is also most imperative that the GSP plus exports are properly monitored in respect of each tariff line quantity and value wise.

Further, “we strongly feel that all monitoring at our end should be better than EU. For this, coordination on daily basis between Pakistan Customs, Trade Development Authority of Pakistan and textile industry division with concerned associations is maintained,” the exporters proposed.

Moreover, EU’s 27 conventions and the Walt Disney Better Work Programme should be implemented across all 15 to 20 industrial areas along with evaluation and installation of modern fire brigade systems. The exporters also recommended installation of effluent treatment plant to save 60 percent of drained water and to meet foreign buyer’s requirements.