Zero-rated regime for export oriented Industry in Panacea- S.Assim Shah

MULTAN, June 2^nd: Syed Muhammad Aasim Shah,VicePresident of FPCCI & chairman of APBUMA has said that the government’s decision to charge tax only at the retail stage of a textile product is the first practical step towards the single-stage tax – a concept that was vehemently opposed by tax authorities until Sunday when Finance Minister Ishaq Dar approved a new regime for five export-oriented sectors. Talking to media men at a local hotel alongwith Syed Muhammad Ahsan Shah, Syed Fazil Shah.he said that Pakistan moved decisively towards the single-stage sales tax regime after representatives of five export oriented sectors and the government agreed to zero-rate these sectors. The government has decided to zero-rate the local supplies of textile, leather, carpets, surgical and sports sectors from July. However, the 5% sales tax on retail stage of garments and fabric would stay that means that this would be full and final liability – a concept that is contrary to the concept of IMF-backed Value-Added mode sales tax.He further said that the government would also abolish the sales tax that the textile sector pays on inputs.The zero-rating regime was the first real step towards ending the difficulties faced by the textile sector, said Syed Aasim Shah. He hoped that the government would now clear the outstanding sales tax refunds of the textile sector by August 15. He was optimistic that after that new refund claims will be cleared within two months of filing.The tax refunds have become a major source of corruption in FBR. “People pay a certain percentage of the claimed amounts in bribes to FBR officials to get their refunds,” as alleged by Senator Kamil Ali Agha. Shah said that the extremely narrow tax base and obsolete information technology system were the two most pressing issues that the government should have to address on a priority basis.The compliance level in the FBR, he said, stands at 19 to 20% as many people who were obligated to file returns but there was no one in the FBR to ask about non-compliance. He cited the example of Turkey and said that its tax to GDP ratio increased to 23% due to improvement in compliance.