ISLAMABAD: The Ministry of Commerce has proposed the government to implement zero-rating facility on all the exports oriented sectors. The zero rating of sales tax for the five exports oriented sectors may be allowed on all inputs, including packaging material.
Presently, the zero-rating facility is available to only five export sectors which include textiles (US$9,362 million), leather (US$396 million), surgical goods (US$262 million), sports goods (US$234 million) and carpets (US$74 million).
You might also like
However, other sectors which contribute to the exports even more than the eligible sectors e.g. Rice (US$1,376 million), fish & fish preparations (US$240 million), fruits (US$356 million), meat & meat preparation (US$212 million), chemicals (US$294 million), pharmaceuticals (US$ 588 million), cement (US$ 248 million), plastic material (US$ 141 million) have been ignored.
Secretary Commerce Mohammad Younus Dagha while speaking at a pre-budget seminar on “Budget for Export Growth” said that Ministry of Commerce had been categorically backing the views of the export sector on the policy choices besides other factors which have been affecting the competitiveness. Therefore, he had visited personally the exporters in Karachi and Lahore to receive budget proposals for export growth.
The objective of this seminar was to provide an opportunity to the private sector stakeholders to present their trade related proposals to the public-sector policy makers.
He revealed that majority of the budget proposals received in Ministry of Commerce related to tariff, sales tax refunds and customs rebates. Therefore, he personally took the initial set of proposals to the Chairman FBR, who kindly agreed to favorably process all the proposals. Mohammad Younus Dagha, the secretary commerce presented the following proposals on behalf of the stakeholders.
First proposal was the pending Sales Tax Refunds of the export sectors may be paid and a mechanism for time-bound processing of refunds may be devised. The stuck-up refunds is the single-most important reason, stated by the stakeholders, for decline in exports as it is affecting the liquidity and cost of finance for the export sector.
Secondly, the Refund Payment Orders (RPOs) which have been recently rolled back on the grounds that the refund of sales tax on packaging material has also been claimed in violation of the understanding between the exporters and the government at the time of negotiation of PM’s Package for Exports. The RPOs may be re-approved expeditiously after deducting the disputed amount which may be settled separately.
The customs rebate on imported inputs may be adjusted at the time of receipt of remittance rather than refund, later on, as it affects the cash flows and increases the cost of doing business. There are media reports that the government is contemplating the withdrawal of zero-rating regime.
As the exporting concerns make the production planning according to their cash flow forecasts, the unpredictability ensuing from these news items has affected the business environment. Secretary Commerce requested SA to PM to kindly reassure the stakeholders that it will not be withdrawn.
Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan also addressed the Seminar and also assured the exporters for consideration of their proposals relevant to budget 2017-18 for export growth.
During the Seminar, the exporters also submitted budget proposals which included removal of duty on import of primary raw material and machinery, increase in duty on import of finished items, abolition of regulatory duty on import of certain items, zero rating of sales tax on all inputs including packaging material, suspension of EDS for three years, withdraw levy of GIDC, Increasing coverage of PM export package to missing non-textile sectors, export incentive bonus in exchange rate, clearance of refunds to improve liquidity position of the industry, opening up E-Commerce payment gateways in Pakistan etc.
The seminar was ended with the expectation that budget proposals meant for export growth would be given importance due to declining exports and global trade recession in order to intact the international buyers and to maintain the share of Pakistani exports in international market.
