Refund delay pushed up cost of doing business: Economists Panel's observation

The Panel of Economists has observed that the delay in payment of sales tax refunds has substantially increased the exporters cost of doing business. The Planning Commission's report of "Panel of Economists" issued here on Tuesday noted with concern that the delay in refund payment is still a major issue of the exporters.
The compliance costs associated with the general sales tax and withholding tax related refunds and the customs duty drawback payments continue to be the major issue. Delays in timely payments, distortions processing tax refunds and the high informal costs of obtaining these refunds undermine the competitiveness of Pakistan's export sector.
The procedures need to be made rule-based and transparent. The best solution is to move towards an exception based system of assessment, where exceptions are made on the basis of an automated risk-assessment system having pre-determined validity checks. This system would ensure that compliant exporters have access to a fast-track system, while non-compliant exporters continue to face the threat of assessment. This system will strengthen the incentives for compliance.
The report added that the government can facilitate the private sector in raising its productivity through greater transparency disseminating information on domestic and international prices efficiently, improving access to financial services and enabling links to global trade.
The most important cost of doing business is the time spent and the uncertainty of outcomes in dealing with government agencies, particularly the departments handling Federal and Provincial taxes. Final payments relating to income and property taxes, income tax and GST refunds, electricity and other utility supply and bills are all subject to negotiations. Not only is the final outcome unpredictable but is also time consuming. This imposes a huge cost of doing business not usually captured in cost of doing business indicators, the report added.