PTI govt asked to open escrow account for tax refunds.
KARACHI -- Businessmen engaged in value-added textile exports have pressed the government to ensure transparency in the tax refund system by opening an escrow account.
Towel Manufacturers Association of Pakistan (TMA) and Pakistan Bedwear Exporters Association (PBEA) held a joint press conference on Tuesday to defend their stance, saying the opening of an escrow account was the only viable solution to the stuck sales tax refunds of exporters.
'Only the escrow account will guarantee timely release of refunds for export-oriented sectors,' remarked TMA Chairman Farrukh Maqbool.
Escrow account is an account where funds are held by a third party while two or more parties complete a transaction.
Chairmen of both organisations expressed surprise that the Federal Board of Revenue (FBR) was concerned over working modalities of the escrow account, though the system would ensure the refund of exporters' claims within 72 hours, as committed by the FBR.
They added that in letters, penned to FBR Chairman Shabbar Zaidi, they had proposed a foolproof system in which the three stakeholders of the escrow account would keep monitoring to ensure complete transparency.
The associations pointed out that system-generated refund payment orders (RPOs) had already been issued after necessary verification of the refund claims. However, after the FBR's press conference on August 29, it seemed the exporters would again need to get verification done due to the opening of an escrow account.
According to them, the FBR may be using this excuse as a tool to delay the refund of taxes collected from the exporters. The PBEA chairman said the faster system would only work if funds were available. 'In history, no refund system has worked because funds are always considered part of government's revenue stream,' he said.
'These funds were never made available timely because they were being utilised for other government expenditures.'
Even in the current scenario, the government, due to the unavailability of funds, has issued three-year bonds to the exporters against their pending sales tax refunds.
He pointed out that the discounting mechanism for the bonds had not been made clear and the exporters were stuck with these bonds till further clarification was given by the government to the financial institutions.
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|Publication:||The Express Tribune (Karachi, Pakistan)|
|Date:||Sep 4, 2019|
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