ISLAMABAD: The National Assembly’s Standing Committee on Commerce and Textile on Tuesday advised the Ministry of Commerce to find a workable solution to the issue regarding zero-rated regime for five export-oriented sectors.
The meeting, chaired by Syed Naveed Qamar, was attended by the committee members as well as the officials of the commerce ministry.
After listening to the representatives of five zero-rated exports-oriented sectors and the stance of commerce ministry in this regard, Syed Naveed Qamar asked Adviser to Prime Minister on Commerce and Textile Razzak Dawood to find a middle ground that would be beneficial for both the government and the industry.
He said that a solution should be suggested keeping in mind economic stability and export facilitation.
Earlier, the representatives of five zero-rated exports-oriented sectors informed the committee about the implications of eliminating the zero-rated regime for the export sectors. They pleaded for the continuation of the said regime for export sectors, including textile, leather, sports goods, surgical and carpets.
Export Sector Coordinator Muhammad Jawed Bilwani and the Pakistan Apparel Forum chairman said that zero-rating for export sectors on basis of “no payment, no refund system” should continue and converted into an act from the existing SRO system.
Bilwani informed the committee that the export industry was facing several liquidity crunches as more than Rs200 billion refunds of sale tax, custom rebate, withholding tax, and the drawback of local tax and levies were already stuck with the government.
He said that discontinuation of the “no payment, no refund” regime would further affect 14pc of exporters’ liquidity in every four months, as one shipment takes four months for completion which means 42pc of exporters’ liquidity would be stuck up in a year.
He said that the total export of these five zero-rated export sector was recorded at $23.221 million last year (2017-18).
Meanwhile, Adviser to Prime Minister on Commerce Abdul Razaq Dawood said that the Statutory Regulatory Orders (SROs) of five zero-rated export sectors were removed on the advice of the Federal Board of Revenue (FBR) and the Finance Division.
He said the FBR held that the tax-exempted raw material was being used in sectors that are not part of the zero-rating regime. In addition, he added, the local sale of these sectors was Rs1,200 billion, while the business community was paying only Rs6 to Rs8 billion in taxes on local sales.
He said that FBR has ensured that there would be no difficulty in the payment of refund, adding that it (FBR) would announce a complete plan for smooth payments on the pattern of China and Bangladesh so that the period of refund payment could be minimised.
It is pertinent to mention that the government in 2005 had introduced the zero-rating facility for export-oriented industries.