ISLAMABAD, Feb 27: Finance Minister Shaukat Aziz outlined on Friday broad tax incentives and refund measures to be incorporated in the next year's budget (2004-05), and said the budget would focus on growth and investment.

Speaking at a news conference here on Friday, the minister also issued a warning to foreign embassies and diplomatic missions in Pakistan to stop misusing their privilege of duty-free import of vehicles by selling them in the local market.

Mr Aziz said the government had not yet decided whether to go for a 'structured swap' or a 'plain vanila swap' to convert its eurobond interest from a fixed to a floating rate.

He said that last year the government had taken various measures for prevention of smuggling and checking the misuse of diplomatic channels, and impounded 23 expensive vehicles which had been brought through diplomatic channels but were sold to local people.

The minister did not name the foreign missions involved in this business but said this was a message for diplomats that they should not misuse the privileges they got under diplomatic principles.

He said the new budget would be growth- and investment-oriented and would offer facilities to exporters in the shape of swift sales tax refunds and customs clearance.

The minister said the government planned to introduce a risk-rating system for customs clearance and sales tax refunds for manufacturers-cum-exporters. The system would be introduced at the beginning of the next fiscal year. "We would set parameters of risk rating after due consultations with all the stakeholders and line ministries," he added.

Mr Aziz said a pilot project for swift customs clearance for commercial imports would be launched at the Karachi International Container Terminal (KICT) where the companies with a better tax payment profile and having a less risk rating would be facilitated.

Similarly, a new concept of simplified and fully automated system would be put in place through the new sales tax refund rules that would be based on risk assessment under which tax payers having a good record would be facilitated. Such taxpayers would get refunds on a fast track basis with number of steps involved in the process would be eliminated.

The minister said under these rules refund claims would be allocated to different channels i.e. Green, Yellow, and Red. There will be no pre-sanction scrutiny of claims in the Green channel except for a simple verification of documents.

In the Yellow channel, a pre-sanction desk audit would be conducted, while in the Red channel a proper audit and verification of payment would be conducted.

The system of part payments would also be eliminated for the prized manufacturers-cum-exporters who would get full payment under refunds, the minister said and invited proposals for the forthcoming budget from general people and business chambers.

The minister said the government expected over 5.3 per cent GDP growth by the end of the current fiscal based on high revenue collection, improved large-scale manufacturing and better agriculture sector performance.

"We expect high inflow of foreign direct investment during the current fiscal year as compared to the last fiscal and all indicators show that there will be higher investments that would result in a better per-capita income and reduced levels of poverty at the turn of the ongoing fiscal," he added.