LAHORE: Textile exporters have expressed fear that their working capital of Rs500bn will be stuck with the FBR till the government devises an effective automated refund mechanism for speedy reimbursement of their tax refund claims.

“If the government delays devising of an automated mechanism, it will block exporters’ working capital of Rs500bn, which will hamper export growth,” said Pakistan Textile Exporters Association Chairman Khurram Mukhtar.

Introduction of the automated refund system is the need of the hour that would ease the financial stress of textile exporters since major portion of their working capital had already been blocked in the refund regime and they are unable to accelerate industrial growth and increase exports.

Elaborating, the PTEA chief in a press release on Saturday stated that tax refunds of textile exporters worth Rs200bn were still stuck in the refund regime.

“The release of stuck liquidity will not only boost export, but also bolster the entire supply chain and allied sectors,” he added.

Highlighting the reduction in tax credit facility, he said the industries investing in purchase of plant and machinery for extension, expansion, balancing, modernising and replacement were allowed tax credit equal to 10pc of the purchase price of machinery till tax year 2021.

“This tax credit has been reduced from 10pc to 5pc of the purchase value of machinery in the budget 2019-21. This act will discourage new investment in the industrial sector,” he said, urging continuation of the facility till tax year 2021 with 10pc tax credit.

Published in Dawn, June 16th, 2019