‘Budget to boost export sector’

Published May 17, 2017
ISLAMABAD:  Special Assistant to the Prime Minister on Revenue Haroon Akhtar Khan addressing a seminar  on Tuesday.—INP
ISLAMABAD: Special Assistant to the Prime Minister on Revenue Haroon Akhtar Khan addressing a seminar on Tuesday.—INP

ISLAMABAD: Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan said on Tuesday the Federal Board of Revenue (FBR) is considering proposals to rehabilitate the export sector.

Mr Khan also noted that life will not be easy for those who avoid paying taxes. “I urge all honest people to contribute their due share of taxes to the national kitty,” Mr Khan said while addressing a single-day pre-budget seminar organised by the Ministry of Commerce.

Mr Khan said the FBR’s revenue target for the next year will be over Rs4 trillion, up from the current year’s target of Rs3.6tr. He said the issue of refunds will be considered in the next budget.

At the outset of the seminar, Commerce Secretary Younus Dagha shared the budget proposals, which the ministry had received from stakeholders. The proposals revolved around tariff reduction, sales tax refunds and customs rebates.

These budget proposals will be submitted to the finance ministry and the FBR in the next couple of days.

The proposals call for the release of pending refunds of around Rs150-200 billion, which can lead to a boost in exports. The Refund Payment Orders (RPOs) have recently been rolled back on the grounds that the refund of sales tax on packaging material was claimed in violation of the understanding that exporters reached with the government when the prime minister announced a relief package for them.

The stakeholders demanded that RPOs should be reapproved expeditiously after deducting the disputed amount, which may be settled separately.

To avoid the piling up of refunds, it has been proposed that the targets of tax officers should be fixed on a gross collection basis. Currently, the deduction of refunds from their collection performance encourages tax officers to delay refunds.

The stakeholders demanded that the zero-rating facility should continue for the five export-oriented sectors in the next budget. It was proposed that the coverage of the facility should be expanded to other export-oriented sectors, such as rice milling and processing, fish packaging and processing, meat and meat processing and pharmaceuticals.

The stakeholders have also demanded that the zero-rating facility be extended to cover packaging material, which is an essential input in value-added exports.

All raw materials used in export goods – or in local goods that have to compete with the zero-duty imported goods – should be allowed without any import duty or other taxes. It is high time such anomalies were removed from tariff lines to encourage export competitiveness and discourage imports of goods produced locally, the proposals state.

The stakeholders pointed out that goods imported by Afghanistan from other countries pass through Pakistan’s territory duty-free as per the transit trade facility. But exports from Pakistan’s bonded warehouses to Afghanistan are subject to 15pc general sales tax (GST). The proposals suggest that this anomaly should be removed. Any misuse should be stopped through a robust countercheck system rather than stopping all exports, they said.

It is proposed that duty rebates under all schemes should be paid in the same manner by the bank at the time of remittance, and not processed at the FBR.

During the seminar, exporters submitted budget proposals that called for the removal of duty on the import of primary raw material and machinery, increase in duty on the import of finished items, abolition of regulatory duty on the import of certain items, zero-rating of sales tax on all inputs, including packaging material, suspension of export development surcharge for three years, withdrawal of the gas infrastructure development cess, coverage of the prime minister’s export package to non-textile sectors, export incentive bonus in the exchange rate, clearance of refunds and opening up e-commerce payment gateways in Pakistan.

Published in Dawn, May 17th, 2017

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