ISLAMABAD: The Federal Board of Revenue (FBR) put on hold payment of around Rs100 billion refunds of exporters and domestic suppliers in the preceding fiscal year, a top official told Dawn on Saturday.
However, Special Assistant to Prime Minister Haroon Akhtar Khan said the total sales tax refunds would be much less than Rs100bn.
The tax department has issued letters for the release of around Rs30bn sales tax refunds, Mr Khan said, adding that cases of refunds worth Rs35bn were deferred because of insufficient or wrong information.
In contrast, Pakistan Apparel Forum Chairman Jawed Bilwani told Dawn that the total amount of exporters’ refunds held up by the government was between Rs250bn and Rs300bn. This amount included sales tax refunds, customs rebate and duty drawback amounts. The industry was faced with liquidity crunch because of blocking of refunds by the FBR, he added.
“Pakistan is losing its share in the world export markets to Bangladesh and Vietnam as a result,” he said, adding that the cost of doing business has increased manifold in the last few years.
However, Mr Khan insisted that the total stock of refunds has dropped significantly in the last few years. “The exporters are quoting wrong figures.”
The premier’s special assistant also dismissed the impression that the refunds were withheld to show positive revenue figures. “We have crossed the revenue target. We will clear all refunds by August,” he said.
He also denied that the tax machinery took advance taxes to achieve the target. He however admitted that Rs40bn taxes were taken in advance from big taxpayers during the last year.
As a result of this huge amount, revenue collection in the first quarter (July to September) of the previous fiscal year witnessed a shortfall of over Rs35bn. “We have not taken any advance tax this year,” he said.
He said the FBR lost maximum revenue during May and June as the government froze the prices of petroleum products despite increase in international rates.
On the failure of tax amnesty scheme for traders, the special assistant to the prime minister said the FBR did its best to support traders, but ultimately they were reluctant to file tax returns.
“Traders preferred to pay 0.4 per cent tax on banking transactions (exceeding Rs50,000 in a day), but they were not willing to file income tax returns or whiten their business capital,” he said.
He said the FBR expected to receive more than Rs22bn from the levy in the current fiscal year.