The federal government has announced the procedure for providing drawback of local taxes and levies, under the textile package announced in the budget FY17, to exporters that have enhanced exports by 10 percent in FY15 compared to FY14.
According to State Bank of Pakistan (SBP), the Ministry of Textile Industry has issued an Order namely "Drawback of Local Taxes and Levies 2016-17" vide Notification No 1(41)TID/14-RDA dated November 14, 2016 to provide for drawback of local taxes and levies collected from eligible product lines. The SBP has forwarded the notification, containing the eligibility criteria and procedure for filing of claims, etc, to banks for strict compliance.
As per the procedure, textile exporters have been asked to submit the claims for drawback of local taxes and levies by 30th April, 2017 through nominated authorised bank. However, any unit which files fraudulent or false claims will be liable to penalty of 100 percent of the claim along with reversal of the claim amount.
The facility will be extended to the whole of Pakistan including Export Processing Zones and will come into force at once. The drawback will be available on an annual basis on Free on Board (FoB)-realised values of enhanced exports for shipments made during 2015- 16 if increased beyond 10 percent over last year's exports, ie, 2014-15. The export performance will be analysed separately for each category of eligible products and the drawback will be provided to manufacturing-cum exporting units on exports of products under specific Tariff Codes of the Pakistan Customs Tariff at rates as specified in the order.
All units availing the drawback will be required to register registered sole proprietor, partnership or a company and with the Ministry of Textile Industry, besides a member of a textiles association registered with the Directorate of Trade Organisations, the Ministry of Commerce.
Each textiles association will be responsible for certifying the authenticity of information provided by the exporting units pertaining to the registration with the Ministry, and the application documents for claims under this Order. The Association concerned will exercise due diligence to ensure authenticity of the documents. Only notified executive members of the association will be eligible for verifying the claim documents.
For claims, the units will file claims for the incentive in the online Form and state all export shipments, during FY 2014-15 and 2015-16, and get online verification on the Form from the respective association of which the unit holds valid membership. The applicant will nominate one authorised bank to submit the claim to SBP BSC.
Yearly average of SBP DMMD WAR of the base year would be used for conversion of foreign currencies of both years (base and performance). All amounts will be converted to USD and increase will be calculated in USD. The DLTL at applicable rates on category wise enhanced (beyond 10 percent) will be calculated in PKR using the yearly average of SBP DMMD WAR of the performance year.
Exporters have been asked to submit the printouts of the Form duly certified by the Association and supporting documents, by 30th April, 2017 to the field offices of SBP- Banking Services Corporations (SBP-BSC)-through nominated authorised bank. No new claims shall be accepted after 31st March, 2017 by the nominated banks. The admissible incentive payment as approved by the field office of the SBP- BSC will be made by crediting the account of the authorised bank, which will pay the amount to the unit within 24 hours thereafter.
In order to avoid delays or rejection of the incentive claim, the authorised banks, while certifying the documents will ensure that the description of the commodity and Pakistan Custom Tariff code recorded in the form is correct and corresponds with the documents attached.
The applications will be entertained on first come first serve basis. The discrepant claims will be processed on the basis of the date they are re-submitted after corrections. Applications containing discrepancies will be returned by the State Bank to the authorised banks within thirty days from the date of submission of claims for re-submission after rectification of the discrepancies within thirty days. The discrepancy will be issued to the authorised banks along with a copy to the claimant. While re-submitting the applications, authorised banks will quote the reference of the "Forwarding schedule" under which the application was originally submitted.
In case of non-submission within thirty days the claims will be rejected without any further process. The receipt of incentive payments will be properly reflected in the book of accounts or balance sheets of the exporting unit. The federal government reserves the right to conduct periodical, random, on- the-spot checks and audits to verify the claims filed and drawbacks received under this order.
However, as per procedure, any unit which in contravention of the provisions of this order, through acts of omission or commission, files fraudulent or false claims shall be liable to penalty of 100 percent of the claim along with reversal of the claim amount. In addition, the association concerned may also become ineligible for future verification of documents.
Textiles associations verifying the drawback claims will also required submitting quarterly reports of verifications to the Ministry of Textile Industry with chairman's signature after taking printout from their online panel. The federal government reserves the right to make any changes, additions, deletions and modifications in the scheme under this order which it may consider necessary and any interpretation or clarification required regarding the application of this order shall be made by the Ministry of Textile Industry. The SBP has asked Authorised Dealers to bring the same to the notice of all their constituents.
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