Zero-rating status a hope for decline in textile exports

The Pakistan textile industry has been facing troubles due to huge liquidity outstanding in sales tax refund, customs rebate and drawback on local taxes and levies claims. In the wake of this downslide the value-added garment sector expect the Government to grant zero-rating status to five export-oriented sectors to boost the country’s exports.

Chairman Jawed Bilwani of Pakistan Apparel Forum (PAF) stated that the government is not fulfilling its promise of granting the sales tax zero rating to five export sectors. The decision not to grant zero rating to the five export sectors shall be tantamount to crippling and ruining the export sectors amid stiff competition from regional competing countries.

Bilwani appealed the Prime Minister that the zero rating – ‘No Payment No Refund’ system for exports should be implemented forthwith as per his commitment made with the exporters because collecting sales tax and then refunding was not only an exercise in futility but involves precious time of staff of Federal Board of Revenue (FBR) and also burdens the foreign exchange earning exporters in unnecessary hurdles. PAF chief said despite several exhibitions and tall claims of massive visits by foreign buyers, unfortunately no increase in exports has been witnessed.

He requested the prime minister to review such futile exercises and ensure result-oriented measures.

According to him, the exports have declined 12.92 percent to $15.606 billion in the first nine months of the current fiscal year while the exports of regional competitors have increased.

He added that despite tall claims of releasing held-up sales tax refund claims of exporters, only few payments below Rs 5 million against those refund payment orders (RPOs) issued till August, 2015, had been paid to favored businessmen.

For exporters with claims of over Rs 5 million, initially they had been promised payments in the form of bonds and later payments in cheque but no payments had been made to them as yet, despite the fact that RPOs against the same were issued 19- month back.