ISLAMABAD: The Federal Board of Revenue (FBR), Monday night, finalised all arrangements with the help of the Pakistan Revenue Automation Limited (PRAL) for restoring the “FASTER” system for payment of sales tax refunds of billions to the exporters.
In this connection, the FBR’s technical teams along with the PRAL and relevant Inland Revenue officials from the operations side tested the system to remove errors and problems in the system.
Recently, Pakistan Apparel Forum refers to the FBR’s meeting with the stakeholder associations of Value-Added Textiles Export Sector whose chairmen/ representatives highlighted the delays caused in the processing of sales tax filed under the FASTER system and also delays in the issuance of eRPOs (electronic refund payment orders) and release of refund claims under Sales Tax Act and Rules.
The stakeholders demanded to resolve the matter of Sales Tax Refund up to the satisfaction of textile exporters to enable and facilitate them to enhance exports.
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A joint forum of exporters met the FBR including the Pakistan Textile Exporters Association (PTEA); All Pakistan Textile Mills Association (APTMA); Pakistan Hosiery Manufacturers Association (PHMA); Pakistan Textile Council (PTC); Pakistan Ready Made Garments Association (PREGMEA); Towel Manufacturers Association (TMA); Pakistan Apparel Forum; representative of M/s US Apparels; representative of M/s Nishat Limited, and representative of M/s Crescent Cotton Mills Limited.
Textile stakeholders apprised the Member IR (Operations) that the processing of sales tax refund claims through the FASTER system has been suspended since January 6, 2023, and exporters are facing financial issues. Joint demand was to ensure refunds are processed strictly in accordance with law and rules and released in 72 hours, as per commitment.
The FBR responded that the processing of refund claims is suspended as the hardware and the software of the FASTER system is being upgraded as the previous became obsolete. The system will be fully operational by Monday. There are certain individual cases/ aspects involving sanctioning of inadmissible refund claims. The tax authorities floated proposals to forestall inadmissible/ false refunds through system checks in respect of the following: (i) Duplicate Invoice claims by certain taxpayers; (ii) duplicate claims of Goods Declaration; (iii) processing of excess refund through FASTER over and above the maximum limit of 12 percent of export value; (iv); transfer of excess amounts of refund in the accounts of the exporters and (v); check/ restriction regarding debit/ credit note.
Representative associations agreed with the checks as the same were not in any way hampering the genuine claimants of the refund. However, the representatives of associations reacted that such findings should have been shared with stakeholders rather than causing delays. They also expressed their concern and questioned as to why the genuine exporters were penalised owing to delay in refunds causing severe liquidity crunch in order to check and identify one per cent or two per cent wrongdoers/ fake claimants against whom action should be taken as per law.
The tax authorities also shared their proposals for deliberations in respect of the following: (i) FBR proposed to increase limit of minimum value addition from 10 per cent to 20 per cent. However, the same was accepted at 15 per cent for an interim period of two months. After two months the same will be reviewed; (ii) maximum limit of processing by FASTER will remain intact up to 12 percent till further review after two months; (iii) wastages will be reported in Annex-H through a separate column to disallow input tax relating to wastages. The proposal was vehemently opposed by the associations being against the applicable laws and rules made there under.
Introducing HS code-wise negative list of inadmissible items in terms of section 8 of the Act: The refund amount disbursement after realisation of export proceeds was proposed; however, the same was seriously objected by the exporters and the same was deferred/ dropped.
The stakeholders reacted that to consider enhancement the percentage of value-addition needs to be properly discussed with rationale and justification. There were multiple factors affecting the percentage of value-addition which are debatable. Associations’ representatives also highlighted that zero-rating was withdrawn and sales tax was imposed to register local business under point of sales (POS) which has yet to be successfully achieved by the FBR; however, on the other side, the export business was suffering owing to stuck-up liquidity in shape claims of sales tax refunds.
Copyright Business Recorder, 2023
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