KARACHI: The Federal Board of Revenue (FBR) has agreed to clear around Rs83 billion in old pending refunds and Rs43 billion in outstanding rebates over the next two to three months, offering relief to the business community.
The decisions were taken during a meeting between FBR Chairperson Rashid Mahmood Langrial and office-bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), held on the directives of Prime Minister Shehbaz Sharif to ensure regular monthly engagement with Karachi’s business community.
The meeting discussed a wide range of issues confronting businesses, including taxation, customs procedures, imports, exports, refunds and sales tax registration.Briefing the media on the outcome, FPCCI Senior Vice President Saqib Fayyaz Magoon said the FBR chairperson has agreed to several proposals put forward by the business community and issued on-the-spot instructions to relevant officials.
One of the major developments concerned the Export Facilitation Scheme (EFS), particularly issues relating to the misuse of grey fabric and higher valuation rulings for raw materials imported under the scheme.
During the meeting, Magoon said that exporters face difficulties over the requirement for 10 per cent value addition. It was clarified that the condition relates to exports of finished products and not the import of industrial raw materials.
Under the revised understanding, exports will no longer be stopped merely because the prescribed 10 per cent value addition is not immediately reflected. The relevant Goods Declaration will be allowed to proceed, while value addition, production costs and the valuation of exported goods will subsequently be reviewed.
The issue of pre-arrival filing of Goods Declarations was also discussed. The FPCCI pointed out that the Funds Identification (FI) condition imposed by banks often compels importers to arrange payments at the last minute, discouraging pre-arrival filing.
The FBR agreed in principle that the FI condition should be checked at the out-charge stage to encourage pre-arrival GD filing and reduce clearance times. Necessary amendments to relevant State Bank regulations will also be considered.
In another significant decision, the FBR chairperson ordered the time allowed for resolving classification disputes to be reduced from 120 days to 90 days.The meeting also discussed anomalies relating to tax exemptions under the Fifth Schedule, with the FBR agreeing to address the matter in consultation with relevant departments.
Magoon said the business community has strongly raised the issue of old pending income tax refunds amounting to around Rs83 billion. The FBR chairman directed that these refunds be cleared within two to three months.
Similarly, it was decided that income tax refunds for which Refund Payment Orders (RPOs) have been issued since August will be paid immediately.Outstanding rebates of approximately Rs43 billion will also be cleared over the next two to three months, according to the FPCCI official.
The meeting further decided that low-risk sales tax registrations will be completed within one week. In high-risk cases, verification will be sought from relevant trade associations to expedite the registration process.
The FPCCI also raised concerns over the distinction between industrial and commercial importers of raw materials and demanded the removal of unnecessary differences between the two categories. The FBR chairperson said the issue will be placed before the FBR Board for an appropriate solution.
The slow progress of the small traders’ registration scheme also came under discussion. Against a target of bringing one million traders into the tax net, only around 3,800 to 5,000 traders have so far been registered.
