Implementation problems in new DLTL SROs

KARACHI: Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) has protested against the delay in implementation of SRO 1062 and SRO 42-A allowing exporters to file Drawback of Local Taxes and Levies (DLTL) claims.
In a recent meeting with commerce secretary Younas Dagha, PLGMEA patron-in-chief Fawad Ijaz Khan said the State Bank of Pakistan (SBP) has not issued a circular to banks outlining the payment procedures of the DLTL claims due to lack of consensus among stakeholders. “Ministry of Commerce, Ministry of Textile, Ministry of Finance, trade associations, banks and SBP have different viewpoints on the procedures of implementing the SRO’s,” he added.
The Ministry of Commerce had issued SRO 1062 on October 18, 2017 for the non-textile exports and Ministry of Textile issued SRO 42-A on October 20, 2017 for textile exports in which duty drawback ranging from four to seven percent was allowed on export of five zero-rated exporting sectors.
Both the SROs were issued as per the decision of the Economic Coordination Committee (ECC) meeting which was chaired by the prime minister. Ministry of Commerce has informed the SBP that attestation of DLTL cases by trade associations was not required. Fawad said without attestation, there was a possibility of fraudulent exports.
The Ministry of Finance was not allowing the banks to pay directly to the exporters as per treasury rules after shipment and payment realisation. Banks were also reluctant to pay because in case of payments on non-genuine exports, banks did not want any responsibility. The SBP wants authority from Ministry of Finance to debit their account with them which was still awaited.
Fawad has requested the prime minister to intervene so all stakeholders meet urgently and arrive at a consensus, so that the SBP could issue the circular, and exporters file claims of DLTL cases with the banks for payment.
The SBP also wants clarifications on shipment date (GD date or on board date) inclusion of Russia in non-traditional countries list, deletion of requirement of bank guarantee if in case an exporter increases export by 10 percent during July-December 2017 over total Exports of 2016-17, and also on deletion of chambers from attesting the DLTL claims. PLGMEA patron said he had also requested the prime minister, the commerce minister and Dr Miftah Ismail to share the copy of the SRO with the association and the SBP before issuance, but unfortunately it was not shared. “They shared with us only the initial draft of SRO.” Earlier, the Ministry of Finance had called a meeting to discuss the SROs, which was attended by the SBP officials, but unfortunately no one from the Ministry of Commerce and Textile attended the meeting.