‘Stuck refunds pile up to Rs100bln in eight months’

KARACHI: Pending refunds of exporters piled up to approximately Rs100 billion in eight months since the introduction of automated clearance system that the government promised could release liquidity within three days, a trade body’s head said on Wednesday.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Anjum Nisar said the government failed to refund sales tax claims of textile exporters within 72 hours under the fully-automated sales tax e-refund (known as Faster) system.

“The government has not paid exporters’ claims for the last seven months,” Nisar said during a meeting with members of Pakistan Apparel Forum.

“Approximately Rs100 billion of textile exporters’ liquidity was held up under Faster refund system in last 8 months and total Rs210 billion are withheld with the government.”

FPCCI president said timeline for payment of customs rebate claims, which was previously reduced to 7 months, prolonged to 13 months, now. He said the government committed to clear claims of customs rebate and drawback of local taxes electronically along with export proceeds. Nisar said exporters are in fix and under stress as the government is not implementing the decision it has taken to support export-oriented sector.

Nisar, citing the finance adviser’s promise, said the government would revisit its decision in three to six months if the new refund system would not work.

“More than eight months have been passed and the FBR Faster system has failed in speedy refunds,” he said. “Therefore, the government should honour their commitment and restore zero rating – no payment no refund regime for the export sectors.”

Nisar said refunds are stuck as the Federal Board of Revenue failed to achieve its revenue collection target so far.

The FPCCI president further demanded power tariff of 7.5 cents/kilowatt-hour, including all charges across Pakistan, including Karachi, and re-gasified liquefied natural gas price of $6.5/million metric cubic feet/day.

Nisar said Oil and Gas Regulatory Authority separated zero-rated industry from general industry for gas tariff, while National Electric Power Regulatory Authority is not implementing the decision of separate treatment.

“Tariff for electricity and gas should be fixed on yearly basis for the export-oriented sector as it has to make six months delivery commitment to their buyers in advance and frequent increase in the electricity and gas tariffs jeopardise their entire planning and they suffer huge losses to keep up commitments to their foreign buyers,” he said.