Zero-rating facility may be withdrawn

KARACHI: The government may withdraw the zero-rated tax facility given to the export-oriented sectors as refund claims from the exporters continue to move up, a top official said on Friday.

 “The amount of refund claims during the first seven months is same as the claims filed during the corresponding months of the last fiscal year,” Haroon Akhtar, special advisor to prime minister on revenue said on Friday during his visit to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).He said the zero-rated sales tax facility was previously withdrawn by the government after detection of massive misuse.

However, this facility was restored this fiscal year on the demand of the textile industry with the pledge of no payment – no refund, he added. “The government will review the decision of zero-rated sales tax facility if refund claims continue accumulating,” Akhtar said.

During his address, he highlighted economic achievements of the current government and said that it was acknowledged by donor agencies as well as international media. He termed tax evasion was the biggest economic problem of the country. Akhtar said there were problems of corruption at the lower tier of the Federal Board of Revenue (FBR) but people were not paying.

He said for a long time, universal self assessment scheme (USAS) was in vogue. However, it needs proper checks through audit, he added. Akhtar pointed out that the business community treated any notices from the FBR as harassment. “Instead of complaining, the business community should maintain accounts,” he advised.

The present government is business friendly and gives priority to its recommendations. Last year about 200 business associations and chambers were taken onboard before finalising the budget proposals. “This year this practice will continue,” he said. Commenting on the Broadening of Tax Base (BTB) drive of the FBR, he said Pakistan does not need to increase tax rates. “But proper enforcement is the need of the time,” he added. 

He said that more tax revenue and increased number of taxpayers would reduce the burden on the existing taxpayers. Higher withholding tax rate for non-filers was one such measure. He said presently only the National Bank of Pakistan (NBP) was receiving tax payments.

He added that the FBR was working with the State Bank of Pakistan, under which all the banks would be authorised to receive the payments. Dr Muhammad Irshad, chairman, FBR, said about Rs65 billion refunds had already been disbursed during this year despite several incentives granted by the government to various sectors.

He said that FBR was expecting more revenue from the business community in return of incentives. He also urged the business community to register their grievances with the FBR instead going in litigations. Zubair Tufail, president, FPCCI, said the FBR officials were very rigid in tax recovery. He said taxpayers were facing difficulties because the tax officials were attaching bank accounts without giving opportunity of being heard.