IRIS, the Federal Board of Revenue's (FBR) portal that allows online submission for refund claims, has been non-functional since August 2016, according to a Business Recorder exclusive. Any attempt to open the portal since then has been met with the disturbing message that "transaction not allowed as there is no refundable amount." What is even more disturbing is the fact that there were link problems in submitting tax returns/refund claims last year as well that necessitated an extension in the final date of submission - an extension that has been given this year as well. The obvious question is where does the problem lie and why has it not been resolved yet? Given that 2016-17 is the second fiscal year whereby refund claims have yet to be entertained by IRIS (with the first quarter of the current fiscal year having ended) the blame may lie with the failure/inability of the FBR to hire those with relevant education and experience in computer skills to ensure that the problem is resolved once and for all. However, sceptics reject this rationale and refer to what has been patently evident during the past several decades, spanning several governments: refund claims are routinely deliberately delayed beyond the end of any fiscal year at best or not processed at all at worst in an attempt to show higher revenue than is in fact the case. This trend is more apparent during the years when the country is on an International Monetary Fund (IMF) programme where deficit containment is a time bound tranche-release condition.
Official data, shared with the IMF during the twelfth and final review under the recently concluded 6.64 billion dollar Extended Fund Facility, reveals that the refunds were 205 billion rupees as of end June 2016 though the government paid around 21 billion rupees a few months ago at a much publicised ceremony that was attended by the Prime Minister leaving around 184 billion rupees of outstanding refunds. Private sector estimates total refunds at 200 billion rupees even today. Be that as it may, the IMF's review notes that "the authorities explained that this increase reflects, in part, a more systematic effort to register outstanding claims" - an argument that is challenged by the private sector.
The bulk of these refunds were outstanding GST claims - to the tune of 133 billion rupees - and as per those who have submitted claims for refunds - failure to clear them is a major reason for their experiencing serious liquidity issues. This, in turn, has compelled many an exporter/manufacturer to borrow from the domestic commercial market to meet operating expenses which, in turn, has raised their costs of production and disabled them from sustaining their market share internationally as the cost of export products rises vis-a-vis competing countries (and our exports have been declining), and domestically given our large porous borders as smuggling is fuelled.
The FBR must surely accept that delays in refunds further compromises the culture of compliance of payment of due taxes as it is invariably the compliant taxpayer who has to foot the bill. Thus to encourage a culture of compliance as well as ensure that the international market for our products and sales of locally produced items in the domestic market are not compromised the government must take appropriate measures to deal with the portal's non-functionality. One way to do this would be to penalize the FBR for after all FBR penalises taxpayers in case of delays in payment of taxes - a penalty that is allowed under the law.
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