Karachi, December 27, 2019: “Enhancing Export is a national cause and facilitation to exporters shall be a service to the nation. Resolving the tax matters of exporters should be among the priorities of FBR. The office of the Federal Tax Ombudsman (FTO) is fully committed to fairly and independently correct the lacunas and flaws in taxation system.
The FTO as per the law may exercise its jurisdiction and authority against reported maladministration in FBR on individual claims and can also take suo moto in the larger interest of the country. FTO will swiftly respond to the requests of exporters for justice against non-compliance of laws, rules and procedures by FBR machinery which may cause unjustified delays, particularly against sales tax refund claims of exporters under new FASTER System.”
This was stated by Honourable Federal Tax Ombudsman Mushtaq Ahmad Sukhera during his visit to Pakistan Apparel Forum office, PHMA House, Karachi. He was accompanied by Manzoor Hussain Qureshi, Advisor (Incharge), Income Tax / Sales Tax and Syed Ayaz Mahmood, Advisor and Abid Mehmood Director Admin.
Addressing the value added textile exporters, Honourable FTO took pride in stating that the FTO Offices across Pakistan were holding the professional advisers having high integrity and fame with remarkable career of service to the country. The FTO team has strong believe in service to Pakistan and reciprocate to the society and citizens.
He informed that being the FTO, since assumption of responsibility, he has invoked his jurisdiction and authority and took suo moto on several taxation related matters and maladministration and referred the FTO inspections to probe several cases in Faisalabad, smuggling and confiscation of vehicles in Quetta and misuse of green channel by a mobile phone company in Karachi, which unearth the maladministration by functionaries administrating tax laws.
The FTO gave patient hearing to the problems and issues apprised by the Chairman, Pakistan Apparel Forum, M Jawed Bilwani, Chairman (PHMA), Aslam Karsaz, Chairman (PRGMEA), Shaikh Shafiq, Chairman (PAKSEA), Kamran Chandna, Chairman (PCFA), Khawaja M Usman, Former Chairman (PCMA) Abdus Samad, Deputy Chief Coordinator (PHMA) Junaid Makda, Senior Vice Chairman (PHMA) Khizer Mehboob, Vice Chairman (PHMA) Abdur Rehman and leading textile exporters and articulated that the grievances mentioned by the Forum were genuine, however, the current state of economy was also facing a set of unprecedented challenges like the current account deficit, fiscal deficit etc. The Govt. in the last budget removed the Zero Rated Status for the five export sectors and imposed 17 percent sales tax.
He was of the view that to start with 5 percent sale tax would have been an appropriate percentage to avoid any liquidity hardships for SME exporters as currently billions of rupees in shape of sales tax refunds have been stuck up. He agreed to the reservations of exporters that it would have been better option for the Govt. to follow the Bangladesh Model rather than introducing slow responding FASTER Refund System which was enforced without prior trial and testing, reportedly, FASTER lacks efficient feedback and monitoring was not in place to timely respond to exporters against their claims.
He advised to exporters to identify the flaws and lacunas in the system and also report their genuine grievances to FTO to resolve their matters in accordance with the law.
Jawed Bilwani, Chairman, Pakistan Apparel Forum in this welcome address to Honourable FTO conveyed gratitude for his 2nd visit to this office and informed that huge amount of exporters’ liquidity of billions of rupees in Sales Tax Refund, Custom Rebate and Withholding Tax has been stuck up with the Government causing great sufferings to the already burdened exporters who are now at a loss to understand how to make both ends meet and such an alarming situation will ruin the export business of the Value Added Textile Exporters.
Reportedly, hundreds of exporters SMEs have stopped their production owing to liquidity problems and shall be compelled for closure if their sales tax refunds are not released on immediate basis to facilitate them to get new orders and resume production. Small and Medium Export Industries are in total dire straits and demand immediate attention of the Government for their survival.
He stated that it was agreed that refund would be paid to exporters along with export proceed like Bangladesh Model. Contrary to this FASTER system was introduced for speedy refunds in 72 hours which is totally failed. Despite of issuance of RPOs, refunds have not been given.
Most of the cases are not cleared within 72 hours of submission of claim. FASTER System runs only once a month instead of every week. Complete details of Objection / Rejection are not provided by FBR to claimants. FBR is not complying its own rules and regulation Processing of refund claims under new system FASTER.
We have collected the data of refund status of July-Oct 2019 from few exporters and it was revealed that only 17 percent amount is sanctioned against total refund claimed in Annexure H of new refund system FASTER while remaining 83% amount is deferred and pending with the FBR.
However, many of the SME exporters are unable to claim refund due to difficult new refund system. He requested the FTO to intervene and direct the FBR to inform as to why the new FASTER system has not performed efficiently and how many exporters among total registered exporters got refunds under new refund system FASTER.
He conveyed his apprehensions on Notices issued by RTOs and LTU Karachi to manufacturers-cum-exporters regarding Withholding of Sales Tax u/s 3(7) of Sales Tax Act 1990 for furnishing record, documents and statement for the period Aug-2014 to June-2017 which has created unrest among our members manufacturers-cum-exporters.
Requisition of plethora of record without seeking any specific document is quite unwarranted despite in the presence of electronically data including details of exports, imports, purchases and other related record in sales tax return with FBR.
Bilwani appealed to the Honourable FTO to take cognizance of the issues and problems being faced by the exporters due to non-compliance of rules, regulations and laws by the Tax Officials. While concluding the meeting, Honourable FTO assured to address all the genuine grievances of exporters and invited the team of Pakistan Apparel Forum to visit FTO Office along with issues and proposals to take up the same with the concerned to resolve them.