Entire textile chain to be zero-rated: Refund issue
By Parvaiz Ishfaq Rana
KARACHI, March 23: The chairman, Central Board of Revenue (CBR) Abdullah Yousuf has said steps are under way to bring entire chain of textiles and related goods exports under zero rate which will help resolve 70 per cent of sales tax refund problem. Speaking at the annual dinner of the Income Tax Bar Association, Karachi (ITBAK) on Tuesday, the CBR chairman said the issue of refund against sales tax could be resolved once “we manage to bring entire chain of textile production under zero rate.” He said that last year the CBR paid Rs52 billion towards sales tax refund and out of this Rs37 billion or 70 per cent was paid to textile and once the issue was resolved, the CBR chief maintained, other bulk exports like leather and carpet would be zero rated.
Abdullah Yousuf disclosed that from Wednesday, Customs Administrative Reform (CARe) will be launched, which would bring about a revolution in the system of clearance of goods. He said it is a pilot project at the Karachi International Container Terminal (KCIT). Under this system he said entire process of documentation would be automated and one could clear his shipping and customs documents online before the arrival of ship.
In the competitive world, he said, it was imperative to bring not only reforms but also make necessary investment in machines, infrastructure and up gradate human skills. By doing all these he said it would also bring down cost of doing business facilitating businessman to compete globally.
Therefore, the government was not only bringing in reforms but also making necessary investment by installing computers and other necessary infrastructure for which even the World Bank has committed $150 million.
Admitting that Sales Tax system still needs a lot of improvement, the CBR chairman said that it was gradually being improved and this could be verified from the fact that after introducing STARR the CBR was about to launch STREAM system which will be based on risk assessment.
Such measures are being taken under reform agenda by the CBR, he said and asked the ITBAK to keep giving its suggestions, which was very useful for being based on pragmatic views. “We want to make the CBR transparent and open and all such steps are directed toward this goal,” he said.
In last budget, he said a decision was made to introduce Alternate Dispute Resolution (ADR) system, which proved a good experience as it help a lot to clear the backlog of revenue cases. However, he said still there was a long list of cases pending before commissioner appeals, appellate tribunal and courts.
There was still greater need for reduction in litigation because from revenue point of view the CBR does not get much benefit rather it creates tension and bad taste between the revenue collectors and taxpayers.
“Despite the fact that 50 per cent of the pending cases have been cleared, we still want to review some of the pending cases in order to see if they could be withdrawn,” the CBR chairman declared.
The CBR has set up ADR in all the four taxes to facilitate taxpayers for the maximum disposal of cases and early disposal of pending cases. The CBR, he said, wants to put its energy and time on broadening of tax base and not on matter related to litigations.
On the introduction of Universal Self-Assessment Scheme (USAS), he said there is a sea change in the tax culture. It was such a dream for us to introduce such a scheme which is entirely based on voluntary compliance but the results, Abduallh Yousuf said, had been very positive and now only “we need to improve upon the system.”
The CBR chief said for reforms there was always transition period and “we are also passing through this period” and one of the fundamental changes one could see in the CBR was that “now we consider taxpayer and tax collectors as partners in business.” Once this relationship was fully understood both sides would be able to achieve greater results.
Tax collectors he said are just like a sleeping partner in a business or a joint venture and the former has to help and facilitate in growth of business and not create problem. However, this needs a lot of change in mind-set for which the CBR was working very hard.
Large Taxpayer Units and Medium Taxpayer Units have been set up and more are being taken up along with Regional Tax Offices which will be providing all facilities and collection of all categories of taxes under one roof. Similarly, many reforms have been introduced and implemented at Customs and the CBR will continue to work for further improvement and automation of revenue collection system.
He asked the President, Tax Bar Younus Rizwanit Shaikh to submit their suggestion for the forthcoming budget and said that ITBAK has always gave its recommendations based on ground realities, and the CBR benefited a lot from their valued ideas.
The ITBAK annual dinner which was held at High Court lawn was largely attended and prominent among them were Chief Justice of Sindh High Court Justice Syed Saeed Ashad, Senior puisine Justice Sabihuddin Ahmed and other judges of the Sindh High Court.
