Monday November 29, 2021

Payment of Duty Drawback: Govt to provide Rs24 bn for special fund to State Bank

March 14, 2020

ISLAMABAD: The Ministry of Finance on Friday agreed to provide Rs24 billion for the creation of Special Fund to the State Bank of Pakistan for payment of Duty Drawback (DDB) and Drawback of Local Taxes and Levies (DLTL) to exporters.

In order to boost up exports from the next fiscal year, the Ministry of Finance and all concerned stakeholders agreed to place IT-based software for clearance of payment of duty drawback and DLTL directly once the exports proceeds are received through official banking channel.

During the briefing, the economic managers were told to provide Rs40 billon but when asked about the backlog, it was found that it stood at Rs 24 billion. So it was estimated that in the next fiscal year, the total requirement will stand at Rs2 billion maximum on monthly basis. The meeting also asked the Ministry of Commerce to further revise upward export target from $24 billion to $46 billion if all demands of exporters would be fulfilled. The summary expected to be submitted before the ECC might jack up the export target beyond $50 billion over the next five years till 2024-25.

It was agreed that the government would have to change rules to hand over payment of DLTL from the Ministry of Commerce to SBP while for payment of Duty Drawback the FBR would propose changes into SROs through the Finance Bill 2020-21.

According to an official statement issued here on Friday, Adviser to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh chaired a meeting here at the Finance Division to review the proposals for the facilitation of export-oriented sectors with special focus on small and medium enterprises, which can play a more vibrant role in export promotion with provision of certain facilities by the government.

Adviser to the Prime Minister on Commerce Abdul Razzaq Dawood and Ali Habib gave a detailed briefing to the participants of the meeting on improving the system of duty drawbacks and export rebates that could help with the cash flow situation of exporters and reduce the burden through automation and reduced tiers for verification.

Other proposals included updating the lists of rate of rebates offered on different exported items and provision of funds to the SBP for clearing rebates in a faster manner.

The meeting was briefed that 26 sectors, which can provide exportable materials, have put forward their suggestions for the facilitation and promotion of exports from the country and some of the proposed measures do not even require any monetary contribution from the government.

The adviser finance appreciated the work done by the commerce ministry and the input given by FBR and Customs on the proposals. He said the government aims to provide ease with maximum degree of automation and transparency to exporters.

He directed the Ministry of Commerce to hold further discussions with all stakeholders and prepare draft proposals for making an effective policy for increasing the volume of exports from the country. He said all possible cooperation in the matter shall be provided by the Ministry of Finance and the needful will be done in the next budget.