Exporters launch protest against likely sale tax hike

KARACHI: Exporters on Monday launched nationwide protests against the stuck refunds and a proposed increase in sales tax rate for the export-oriented sectors.

“The protest campaign was started due to serious liquidity problems faced by textile exporters and (on) recent reports that the Federal Board of Revenue (FBR) was planning to bring export sector in the normal sales tax regime (17 percent),” said Jawed Bilwani, chief coordinator of the five export-oriented sectors, comprising textile, sport goods, surgical, leather and carpet.

Exporters also issued a schedule of press conferences and protests across the country.

Bilwani said the FBR imposed taxes to increase documentation, but number of taxpayers is still lower than the last year.

He said the Prime Minister recently announced zero-percent sales tax for the export sector, but it appears not to be a reality in the upcoming budget. 

Bilwani said high sales tax will jack up the pile of refunds. “The government already owes around Rs300 billion of taxpayers in shape of refunds,” he added.

He said these refunds are on account of sales tax, customs rebate, withholding income tax and drawback of local taxes and levy.

The business leader said recently the government started releasing refunds of around five million rupees. The refund payment orders, issued until December 2015, have been paid to
exporters. “However, a big amount of refunds are stuck and industrialists are
facing liquidity shortage,” he added.

The protest drive will continue until June 03 – a likely date for the 2016/17 budget announcement.