The exporters of Small and Medium Enterprises (SMEs) have demanded of the Central Board of Revenue (CBR) to provide withholding tax paying facility to indirect exporters similar to direct exporters. SME exporters, attending a meeting of the Union of Small and Medium Enterprises (Unisame), adopted the stand that although the government had declared indirect exporters (manufacturers) eligible for concessional finance, it did not provide them the same tax paying facility available to the direct exporters whose withholding tax was deducted at source.

Banks, while crediting the account of direct exporters, deducted withholding tax on the export bill and exporters were relieved of cumbersome documentation requirements, instead they simply provided export figures and withholding tax was deducted thereon, they explained.

They asked the CBR chairman to accord the same tax payment facility to indirect exporters, who were mainly manufacturers, processors or packagers of exportable goods and catering to the needs of SME direct exporters.

They further pointed out that in fact goods were dispatched to the port from their premises.

Under the existing system, they mentioned that SME exporters were compelled to transfer letter of credits (LCs) to manufacturers, who insisted LCs on their name as they felt comfortable to pay withholding tax rather than to pay taxes on local sales due to required detailed statements on tax returns as indirect exporters.

Copyright Business Recorder, 2005