Exporters wait zero-rated regime notification to make shipment as per rule

Five Export Sectors’ Associations in Multan have urged the Federal Minister for Finance and the FBR chairman to immediately issue the notification for zero-rated regime for export oriented textile industry, so that exporters could make shipments as per announcements in the federal budget.

The value-added export sectors are waiting for the issuance of the SRO or notification of the decision, as they have to prepare export shipments as per the rule “no-payment, no-refund”.

The government had accepted the demands of the textile sector regarding SRO.1125. They said that the government would abolish 3% to 5% sales tax on different stages which would be replaced with zero-percent sales tax in the budget.

Firstly, the government agreed to zero-rate five major export sectors including textile, leather, carpets, surgical and sports goods in the budget (2016-17). Secondly, zero-rating regime would be applicable on all stages of imports/supplies except retail stage. The entire supply chain would be subjected to zero-rating regime prevalent prior to March 2013.

They said that thirdly, sales tax would be applicable at the retail stage but input could not be claimed at this stage. Fourthly, it had also been decided that the zero-rated sectors would not be entitled to claim sales tax refunds on packing material. Fifthly, it was agreed to restore the SRO.1125 to its original status as zero-rating regime applicable in the past.

Sixthly, it was expected that the sales tax would be applicable on supplies or sales made to unregistered persons. They said that it was a big achievement of the textile sector and the government had accepted their proposals in order to enhance exports.

The government had decided to reinstate the zero-rated regime to value-added textile, carpet, surgical, sports goods and leather trade. They particularly appreciated the role of Finance Minister Muhammad Ishaq Dar for resolving the issue of zero-rated sectors. Following the decision, the FBR took the budget proposal to enhance sales tax on zero-rated sectors.

They further said, this decision would boost Pakistani export, in order to get maximum results (ie 20 to 25% increase), government should immediately release refund payments against Sales Tax, duty drawback and drawback on local taxes and levies (DLTL) as well as bring down tariff of electricity, gas and water to boost exports and give incentives to export as per other competitor countries. They advised the government to continue with the economic-oriented policies so that Pakistan would become self-sufficient instead of seeking loans from the IMF all the time.

This demand came from Syed Muhammad Aasim Shah Chairman APBUMA, Khawaja Muhammad Ilyas (APTMA) Nawab Shehzad Ali Khan Chairman of PCGA, Ex-Presidents of MCCI Shahid Nasim Khokhar, Khawaja Muhammad Yousaf, Atta Shafi Tanvir Senior Vice President of MCCI, Khaliq Qandeel Ansari of All Pakistan Power Looms Association, Zulfikar Nasuha President DGCCI, Muhammad Iftikhar, Chaudhry Abdul Jabbar and Zulfikar Ali.