Fruit exporters crippled by unpaid sales tax refunds

Exporters of seasonal fruits have been unable to fulfill export orders this winter due to a liquidity crunch caused by delayed sales tax refunds, pending since 2022, and bureaucratic obstacles created by the Federal Board of Revenue’s (FBR) regional offices.  

The refunds, primarily stuck at the Regional Tax Office (RTO) in Sargodha, pertain from July 2023 to June 2024. 

The All Pakistan Fruit and Vegetable Exporters, Importers, and Merchants Association (PFVA) has repeatedly requested the FBR to expedite refunds, emphasizing the significant foreign exchange losses caused by delayed payments. 

The PFVA noted that exporters endured heavy losses during the last Kinnow season due to low-quality production, geopolitical tensions, and rising freight costs.  

FBR Chairman Rashid Mahmood Langrial has been urged to investigate why refunds remain unpaid despite implementing automated systems such as STARR and FASTER for timely processing.  The FBR has directed the Chief Commissioner of RTO Sargodha to prioritize resolving these refund claims. 

However, exporters argue that continued inaction has paralyzed their cash flows, estimated at over Rs200 million, forcing them to miss critical export targets for citrus, mangoes, potatoes, and other seasonal produce.  

Exporters highlight discrimination compared to the five zero-rated sectors, which have received refunds up to August 2024, while their claims remain unaddressed. 

The PFVA, which contributed $3 billion to Pakistan’s export earnings in FY2023-24, warned that this liquidity crunch is severely affecting future export potential and harming the country’s foreign exchange reserves. 

The association has demanded urgent action from the FBR to clear pending refunds and ensure the timely processing of future claims to restore exporters’ confidence and keep Pakistan’s fruit exports competitive globally.

Despite directives from the Prime Minister in March 2024 to process refunds swiftly, RTO Sargodha has not complied, creating further financial strain for exporters.