FBR to issue pharma companies’ refunds manually

ISLAMABAD: The Federal Board of Revenue (FBR) on Saturday informed the Senate Standing Committee on Finance that tax machinery would issue billions of rupees refunds to pharmaceutical companies manually till the resolution of FASTER system problems.

FBR Chairman Asim Ahmad told the Senate panel that he had given orders to this effect for issuing refunds manually till the resolution of problems in the FASTER refunds clearance system for export-oriented sectors. The representatives of pharmaceutical companies had appeared before the Senate panel on Friday and apprised the committee that their stuck-up refunds had ballooned up to Rs250 to Rs300 billion. This sector's liquidity choked it and they will not be in a position to run their businesses in such circumstances, the representatives of pharma companies complained.

“We have resolved the refund-related issues of this sector and a technical bug in the system has been removed. The FBR has received 15-16 applications for refunds filed by the pharmaceutical companies. One refund application has also been processed,” the FBR chairman said.

Chairman of the Senate panel Senator Saleem Mandviwalla stated that the FBR, at the time of mini-budget, had assured payment of refunds to the pharma sector but they had repeatedly agitated that the FBR would not be able to meet its promise to issue refunds in 48 hours under the FASTER-Pharma. Senator Mandviwalla stated that the FBR should draft a threshold for collecting advance tax on immovable properties, so that small houses and small properties could be excluded from the purview of this tax.

To a query, the FBR chairman informed the committee that the recommendation to increase tax on advertisements starring foreign actors was moved by the Ministry of Information. The Finance Committee deferred the income tax exemption proposed to Karandaaz Pakistan from the tax year 2015 onwards till the Economic Affairs Division could submit the details about the working of the said NGO.

FBR Chairman Asim Ahmad informed the committee that the exemption to Independent Power Producers (IPPs) has been limited to the life cycle of the power project or 25-year period. He explained to the Senate committee the amendment related to the profits and gains derived by a taxpayer from an electric power generation projects set up in Pakistan on or after July 1, 1988. Through the Finance Bill 2022, the FBR added an explanation that, for the removal of doubt, it is clarified that exemption under this clause shall continue to remain available to those whom exemption under this clause was available on or before June 30, 2021, before insertion of the sixth proviso vide Finance Act, 2021. Provided further that the exemption under this clause shall be available for the life cycle of the project or 25 years from the date of commencement of commercial production, whichever is earlier, it added.

Minister of State for Finance Dr Aisha Ghaus Pasha confirmed seeking the United States' support for revival of International Monetary Fund (IMF) programme. Talking to journalists after the standing committee meeting, the state minister pointed out that talks were underway with the IMF as the global lender was seeking clarification on many issues. Dr Pasha further said while the former rulers damaged the country’s credibility, the current government was seeking better relations with all the nations. “We have reached out to the United States for the revival of IMF programme,” she added. The state minister noted Pakistan’s relations with the United States were improving. “Foreign Minister Bilawal Bhutto's visit to the United States was also successful”, she added.

Finance Minister Miftah Ismail and Minister of State for Finance Ayesha Pasha met US Ambassador Donald Blome and sought Washington’s support for the revival of the IMF programme. Blome was apprised that the government has proposed fiscal consolidation equal to 2.2 percent of Gross Domestic Product (GDP) in difficult circumstances.