SIALKOT-Terming bureaucracy the main hurdle in the promotion of national exports, the chairmen of five exporters’ associations urged the federal government to revive “No Payment No Refund” system and eliminate corruption in the payment of refunds.
They made the demanded while addressing a joint press conference at Sialkot Press Club. They said that the system is necessary to save them from liquidity crisis.
Chief Coordinator of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ejaz A Khokhar said that instead of giving export-related incentives to the exporters, the federal government was putting burden of taxes on the shoulders of the exporters, due to which the cost of doing business has increased and it has also become very hard for the Pakistani exporters to compete in the international trade markets. He said that the national exports are declining day by day in Pakistan and imports are rising due to which it has also become very hard to achieve the target of annual exports of Pakistan.
He said that out of the five export sectors, no sector has yet made development due to the visible bureaucratic hurdles which still remain uncontrolled. The chief coordinator said that from experiences of the past especially during the period from 1996 to 2005, the FBR realised that to collect sales tax from exporters and then to refund was futile exercise. “Numerous frauds were reported wherein collection was less then refunds. Ultimately the federal government identified five export sectors and prescribed list of items/materials used in these sectors which were changed to sales tax at zero percent. This measure provided relief to the genuine exporters. Due to the measure, unscrupulous people in business community and the tax department were never happy as it closed the doors of corruption,” he said.
He narrated that on September 11, 2015, the prime minister committed to announcing an incentive package for exporters in the meeting with exporters in Islamabad and publically announced the zero rated regime to the five export sectors. But eight months have been passed, no implementation has been made as yet, he regretted.
He said that a large amount of sales tax and customs rebate refunds of exporters has piled up and processing of sales tax is critically slow. Due to delay in payment of refunds, exporters are facing shortage of working capital, which is creating problems for their export business, he said. He suggested that automatic compensation to the exporters should be allowed equivalent to 14 percent per annum of the outstanding amount for the period after 7th day of issuance of refund payment orders by the RTO concerned.
There are a number of small exporters who are registered with sales tax only to avail the facility of WEBOC but could not file NIL returns, he said.
It was also demanded by chairmen of five export-oriented sectors that sales tax and custom rebate refunds may be refunded with the export proceeds realisation. Furthermore, previous customs rebates may be paid at once, he said. All stuck-up claims of the exporters should be released without any further delay, he said.
On the occasion, Pakistan Hosiery Manufacturers Association (PHMA) Chairman Ziaur Rehman Chaudhry added that unfortunately, the exporters have again been dragged into the vicious circle of payments of sales tax and then claiming refunds once again. Initially, the tax rate was fixed at the rate of at 2% and 3% through SRO 1125 for exporters but now facilitation under SRO 1125 has been partially withdrawn and tax rate 3%, 5% and 17% have been introduced.
He stressed that original status of SRO 1125 should be restored and maximum facilities should be provided to five export sectors.
He added that in the State Bank of Pakistan (SBP) circular No FEOD/7846/DLTL-2016 dated 19th April, 2016 revised the calculation method of DLTL Scheme 201-15. It notified that calculations of the claim be revised to the US Dollars and increase in export will also be calculated in USD on the basis of yearly average rate of SBP.
Claims will require additional paperwork fresh certificates/undertaking and re-verification of the claims already verified by the ministry of textiles, he said. The step was unwarranted and unnecessary due to its retrospective effects, he added.
He narrated that it would delay the processing of the claims and add to the financial burden on the value added sector. Many exporters received payments from buyers in dollar, euro and in GBP and it is difficult and lengthy procedure to revise each and every entry to convert in dollars, he said. The DLTL claims already submitted under the unification dated 22 October 2014, should be acceptable as the export realisation in rupees has been calculated on daily closing rates published by the SBP, he demanded.
Chairmen of all five export sectors’ association demanded that Finance Minister should direct SBP to withdraw the circular and make payments of already submitted DLTL claims immediately.
SCCI Vice President Syed Ehtesham Gillani, Chairman Pakistan Sports Goods Manufacturers and Exporters Association (PSGMEA) Irfan Elahi, Pakistan Gloves Manufacturers and Exporters Association (PGMEA) Chairman Malik Sadaqat Ali Khan and representatives of Surgical Instruments Manufacturers Association of Pakistan (SIMAP) and Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) also addressed the press conference.