The Federal Board of Revenue (FBR) has directed the payment of around Rs126 billion in pending tax refunds within two to three months, according to Saquib Fayyaz Magoon, Senior Vice-President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
Magoon disclosed the development after meeting FBR Chairman Rashid Mahmood Langrial on Tuesday. The meeting was held under the prime minister’s directive for monthly consultations with Karachi’s business community during the first week of each month.
The meeting reviewed the issue of tax and deferred refunds. Magoon said the FBR had already decided to clear deferred refunds within one to two months, while the business community pressed for the resolution of older outstanding claims.
According to Magoon, pending sales tax refunds stand at around Rs83 billion, while duty rebates amount to approximately Rs43 billion. He said the FBR chairman directed the relevant authorities to clear these refunds within two to three months.
The meeting also discussed measures to prevent misuse of the Export Facilitation Scheme (EFS). Magoon said exporters had been facing difficulties because of higher valuation rulings on raw materials imported under the scheme.
He clarified that the EFS requirement of 10 per cent value addition applies to exports of finished goods rather than imports of industrial raw materials.
Under the revised approach, exports will not be stopped solely because the prescribed value addition is not reflected at the initial stage. The relevant goods declaration will be processed for export, while value addition, overall costs and product valuation will be reviewed subsequently to determine compliance with the prescribed requirements.
The issue of pre-arrival goods declarations was also discussed. Magoon said importers often delayed filing such declarations because banks required a funds identification condition, forcing them to arrange payments at the last moment.
He said the FBR had agreed in principle to check the funds identification requirement at the out-charge stage to encourage pre-arrival goods declarations and reduce clearance times. Necessary amendments to State Bank regulations would also be considered.
FPCCI also requested a reduction in the 120-day period for resolving classification disputes. Magoon said the FBR chairman immediately ordered the period to be reduced to 90 days.
The meeting also discussed anomalies in tax exemptions under the Fifth Schedule, with the participants agreeing to resolve the issues in consultation with relevant departments.
It was further decided that low-risk sales tax registrations would be completed within one week. For high-risk cases, verification would be sought from relevant trade associations, after which the registration process would be expedited.
