The business community, which has been in a state of crisis for the last three years due to the unfriendly and detached attitude of the government, resulting in a lost hope for clearance of ballooning tax refund even after the next budget.
“Considering the present stance of the government regarding the business community, we have lost all hope for receiving our rights, the tax refund which has again touched the figure of Rs 300 billion,” Shakil Ahmed Dhingra Chairman, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Standing Committee on Federal Board of Revenue (FBR) Affairs for the year 2017 said while talking to Pakistan Today.
He said that members and representatives of 11 trade associations in Faisalabad, during a meeting held on Sunday, have informed that they are selling their textile machinery as the cost of doing business has become unbearable. They complained that the refunds worth billions of rupees were not being paid by the government since years now.
He said that FBR has been continuously targeting the exporters by delaying billions of rupees as refunds of sales tax, withholding, customs rebates, duty drawback on taxes and levies for achieving its budgetary revenue collection targets. FBR’s act of rolling back all the pending electronic refunds payment orders of five of the export-oriented sectors namely; textile, leather, carpets, surgical and sports goods, is a lethal attempt to destroy value-added textiles and shatter Pakistan’s textile exports.
Amidst a liquidity crunch, the exporters have failed to materialise the new export order which will further decline textile exports in the coming months, they said, adding that if exporters’ genuine demands were not met, their last resort would be to protest.
In reply to a query, Dhingra said though the government has paid some refund in two instalments, the number of payables has again reached to Rs 300 billion which would be further increased in next few months.
Presently, Pakistan has the highest-ever cost of doing business/manufacturing as compared to its eight competing countries in the region. He said that even the federal government has not implemented its Rs 180 billion textile incentive package during the six months of a relaxed condition under the package. “How can we avail the facility with showing only a 10 per cent growth in exports over the next six months?” he asked.
According to an analyst, earlier the Senate Standing Committee on Commerce was informed by FBR that out of the total Rs 300 billion pending sales tax claims, Rs 55 billion is accredited to the exporters. The current predicament of financial constraints and the maturing of IMF’s loans along with the forthcoming budget, the government is unlikely to clear the huge amount of tax refund before August 2017. The ever increasing circular debt is another challenge for the government to meet prior to announcing the budget in order to reduce the unabated load-shedding across the country.
Apart from the nonpayment of refunds, the business community was also facing double, sometimes even multiple taxes under one head in the country, where consolidation of refunds mechanism is yet to be implemented. Due to the above-mentioned reasons, Pakistan remains in the list of countries with a higher number of taxes per year. According to the World Bank’s Ease of Doing Business Data, Pakistani businesses during 2016-17 face 47 different taxes. What makes the task of forecasting business expenses more difficult is the plethora of withholding taxes which are almost same or in some cases more than the overall taxes applicable on a business.
