Pharma companies: FBR officials directed to issue refunds manually

ISLAMABAD: In a major development to issue sales tax refunds to the pharmaceutical sector, Chairman Federal Board of Revenue (FBR) Asim Ahmad on Saturday directed officials to manually issue refunds to the pharmaceutical companies till the resolution of issues in the FASTER-Pharma system.

The FBR chairman, Saturday, informed the Senate Standing Committee on Finance on Saturday that he has ordered to start issuing sales tax refunds manually to the pharma companies till the resolution of problems. We have resolved the refund-related issues of this sector and a technical bug in the system has been removed. The FBR has received 15-16 applications of refunds filed by the pharmaceutical companies. One refund application has also been processed.

After a presentation of the Pakistan Pharmaceutical Manufacturers Association, Senator Saleem Mandviwalla stated that the former Chairman, FBR Dr Ashfaq, at the time of the mini-budget had assured payment of refunds to the pharma sector within 84 hours. However, we have repeatedly agitated that the FBR would now be able to fulfil its promise and cannot issue refunds in 48 hours period under the FASTER-Pharma.

Mandviwalla referred to the repeated statements of the FBR that the Board had assured the industry that the new “FASTER-Pharma” refund payment system would pay refunds within 48 hours. The FBR also committed with the industry that the FBR will specify in the sales tax rules that the refunds would be issued within 48 hours under the “FASTER-Pharma”.

Senior FBR officials informed that the Drug Regulatory Authority of Pakistan (DRAP) is not cooperating with the FBR for sharing of the list of the raw materials, Active pharmaceutical ingredients (APIs) and medicines registered with the DRAP to verify whether the input imported was actually consumed during the manufacturing of the drugs registered with the DRAP. The FBR’s system has to read and subsequently verify that it is a registered drug.

The representative of the pharma association said that since the last four and a half months, the FBR has not paid a single refund under the FASTER-Pharma.

During the meeting of the Senate Standing Committee on Finance on Saturday, FBR Member Inland Revenue (Policy) informed the committee that the FBR has taken a revenue generation measure to increase the advance rate from one per cent to two per cent on sale and purchase of property for filers. This is an adjustable tax and refundable. The revenue measure has been taken to tax the wealthy people.

Chairman of the committee Senator Saleem Mandviwalla stated that the FBR should draft a threshold for collecting advance tax on immovable properties so that the small houses and small properties may be excluded from the purview of this tax.

To a query, the FBR chairman informed the committee that the recommendation to increase tax on advertisements starring foreign actors was moved by the Ministry of Information.

Finance Committee deferred the income tax exemption proposed to the Karandaaz Pakistan from tax year 2015 onwards till the Economic Affairs Division submits the details about the working of the said NGO.

Chairman FBR informed that the FBR had taxed the Karandaaz from tax year 2015 onwards. However, Appellate Tribunal Inland Revenue has given an order against the FBR. As a result of the order of the Appellate Tribunal, the whole tax demand raised against the said institution was deleted. The FBR has raised the tax demands since 2015 and the whole demand was revered by the Appellate Tribunal.

“We have lost the case against the Karandaaz involving an amount of Rs300-350 million and now this amount has become refundable,” the FBR Chairman said.

When committee members asked about the nature of the working of Karandaaz, FBR high-ups responded that the EAD would be the most appropriate government department to respond to this query. The committee deferred the proposed income tax exemption to the Karandaaz and directed the EAD to come to the next meeting and explain the position.

While discussing the exemption available to the “Supreme Court Water Conservation Account,” FBR officials informed the committee that FBR has already given tax exemption to the Supreme Court dam fund saying that some other welfare organizations are also enjoying the same tax relief.

The FBR authorities disclosed that the Supreme Court dam fund was given tax exemption in the past. They said that several other welfare associations had also been given the tax concessions owing to the nature of their work which is public-oriented.

Senator Sadia Abbasi was of the view that conserving water and building water reservoirs was government’s job.

Senator Mandviwalla asked the FBR to share a detailed table specifying all taxes applicable on the mobile phones.

Committee was happy to clear the proposal of restriction on frequency of audits to once in four years. A committee member asked whether this decision would also apply on the audit cases selected by the Commissioner Inland Revenue? FBR Member IR (Policy) said that yes it would be applicable on cases selected for audit by the Commissioners.

Copyright Business Recorder, 2022