Tax Ombudsman set to settle issues of tax exporters
KARACHI: “Resolving the tax matters of exporters shall be a service to the nation. We will use powers of FTO office to resolve their tax issues and FBR maladministration and if law permits, will also take suo moto action,” says a Press release.
This was stated by Honourable Federal Tax Ombudsman Mushtaq Ahmad Sukhera during his visit to Pakistan Apparel Forum office, PHMA House, Karachi, today Friday 19th January, 2018. He was accompanied by Manzoor Hussain Qureshi, Advisor (Incharge), Income Tax/Sales Tax and Shahid Ahmed, Advisor Customs/Implementation and Abid Mehmood Director Admin.
Addressing the garments exporters, Honourable FTO said that on all important matters, we will take input of exporters who are earning valuable foreign exchange for the country which is much needed to narrow the trade deficit. Declining trend in overall exports in last 4 fours years, is clear manifestation that we are not on the right direction due to which our exports fell from USD 25 billion in the year 2013 to USD 20.45 billion in 2017. If exporters are not strengthened, the exports will not increase.
He further said that our Tax to GDP ratio is lower than even African countries while the neighboring countries, Tax to GDP ratio is much higher. Taxpayers have no trust on tax system and this trust deficit needs to be narrowed. The Audit Notices issued by FBR are creating troubles for the taxpayers who have to divert their energies towards responding to these notices instead of focusing on export matters and added that FTO office will take every step in accordance with law to facilitate exporters by resolving their genuine tax related issues.
Regarding Withholding Tax, the Honourable FTO said that it is the easiest tool to collect advance tax and instead of this, FBR should improve its tax collection system and broaden the tax net instead of squeezing the existing taxpayers. On a query regarding Further Tax, the FTO assured to take up the matter from his platform.
On the matter of pending applications of Zero-rating of utilities, the Honourable FTO said that it is unfortunate that genuine exporters having good profile & history with FBR also suffer which is due to inefficiency of the system. The FTO office will also extend help to exporters if the Recovery Notices are not received by them but amounts deducted from their bank accounts.
Answering to a query, the honorable FTO stated that on average approx. 2,000 complaints are submitted to FTO office annually. Informal complaints are not included in this which we try to resolve through correspondence.
Earlier, Jawed Bilwani, Chairman of Pakistan Apparel Forum welcomed the Chief Guest and other participants and highlighted the tax related issues of exporters.
He said that the pending refunds of exporters with the FBR is the main factor behind slowdown of exports which led to lower production and closure of a number of exporting industries which has finally resulted in drop of textile exports. Therefore the value-added textile exporters associations demand the FTO to take Suo Moto Notice against the excessive delays in refunds by FBR and help in release of all long pending refunds of exporters.
He stated that approximately 30 billion rupees of garments exporters are stuck up in sales tax refunds. Overall pending claims of exporters are to the tune of approx. 250-billion including sales tax, income tax, customs rebate and WHT.
Despite issuance of RPOs, cheques have not been issued as yet whereas under Sales Tax Rules, 2006 as per Expeditious processing and payment of refunds, Concerned RTO /LTU will arrange issuance of cheque for the amount cleared by RMS within 7 working days for the receipt of the E-RPO.
He said that under Section 10 of Sales Tax Act, 1990, the excess amount of input tax shall be refunded to the registered person not later than 45 days of filing of refund claim and Under section 67 of the S.T.A. 1990 in case the sales tax refund is not paid within specified time limit under section 10. There shall be paid to the claimant further sum equal to KIBOR per annum of the refund due from the date of expiry of the time limit. But in the history of Pakistan, Government does not implement its own rules.
Bilwani said that despite having no cotton production, Bangladesh has left Pakistan behind in garments exports which now stand at USD 26 billion with value addition USD 6 billion per 1 million bales.
Chairman PHMA Tariq Munir, stated that in spite of being a cotton producing country, Pakistan’s garments exports are stagnant at approx. USD 5 billion with value addition USD 1.15 billion per 1 million bales. We need attention of the government to increase our exports.
Former Chairman PAKSEA Rafiq Godil, speaking on the occasion, in particular stated that Commissioners have powers to release refunds worth 10-million in a month and we are unable to understand how FBR will manage to pay our huge deferred refunds and added that further tax is opening ways of corruption which needs to be looked into.
Arshad Shehzad, Tax Advisor, PHMA stated that Black Listing of exporters should not be done on minor issues because grey areas persist in the system. The matter to cease bank accounts of exporters is serious to which, attention should be paid. He seconded the proposal of Bilwani about taking Suo Moto action on RPOs non-payment and added that government has capacity & capability to address this matter.
Deputy Chief Coordinator of PHMA Junaid Makda drew the attention of honourable FTO towards non-implementation of government’s own policies. At the time of announcing Finance Bill, relief is announced for exporters but due to non-implementation, there arises need for a PM Package after 6 months. This practice needs to be looked into seriously to find a workable solution. Since we have FTO office for help, we are hopeful that our problems will be resolved at this forum.
While concluding the meeting, Jawed Bilwani proposed to constitute a Committee comprising representatives of Pakistan Apparel Forum and the FTO to resolve the issues of the exporters.
Prominent among those who attended the meeting included: Chairman PHMA Tariq Munir, Vice Chairman PHMA Khizer Mehboob, Chairman PAKSEA Kamran Chandna, Former Chairman PCFA Khawaja Usman and other leading exporters and press & media representatives.