Home »Taxation » Pakistan » RPOs delayed due to red-tapism in FBR, says MCCI chief

  • News Desk
  • Apr 10th, 2017
  • Comments Off on RPOs delayed due to red-tapism in FBR, says MCCI chief
The business community of Southern Punjab was disappointed at Federal Board of Revenue (FBR) as it had rolled back all sales tax refund payment orders (RPOs) issued to the five export oriented sectors i.e. textile, leather, carpets, surgical and sports goods from tax period July 1, 2016 onwards on the instructions of Prime Minister Mian Nawaz Sharif.

This news has developed a state of frustration among the export oriented sector particularly textiles. President of Multan Chamber of Commerce & Industry (MCCI) Khawaja Jalaluddin Roomi alleged that our claims were delayed due to red-tape in the Board of revenue and now bureaucracy was employing delaying tactics to linger-on the payment of refunds till next budget 2017-18.

He said that there was no justification to issue instructions to the field formations to rollback all sales tax refund payment orders (RPOs) issued to the five export oriented sectors i.e. textile, leather, carpets, surgical and sports goods. Under SRO 491, the FBR had issued revised sales tax zero-rating regime for five export oriented sectors i.e. textile, leather, carpets, surgical and sports goods from July 1, 2016 under which 5 percent sales tax was chargeable on supplies of locally made finished article of textile and leather including finished fabrics to retailers or any other category of persons.

Under the new regime it was attempted to ensure levy of sales tax at the reduced rate of 5 percent only at retail stage or supplies to end consumers. Attempt is also made to ensure collection of standard rate of sales tax i.e. 17 percent from persons outside five sectors.

He said that Pakistan's external sector is facing increased pressure as its trade deficit has alarmingly widened to 28.7 percent, $17.4 billion, during the first seven months of the ongoing fiscal year due to a continuous decline in exports and double-digit growth in imports. Made-ups exports are staging a double-digit decline, raw cotton exports instead posted an increase of 5.45% - No rocket science required to ascertain that factories are closing down and precious industrial jobs are being lost.

Roomi has stressed the government to act decisively and rescue the textiles industry from financial crisis as worst ever cash flow crunch has brought the industry to the verge of disaster. Despite the record revenue collection of Rs 2.1 trillion in nine months, non-payment of exporter's outstanding refunds is unjustified. The FBR, under the law, is bound to release refunds within 45 days but they have delayed refunds for years, he said. Textile exporters are badly deprived of liquidity while the government is reflecting the stuck-up refund amounts in its revenue account which is not a fair practice, he stated.

Copyright Business Recorder, 2017


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