Business community not responding positively: CBR Chief

Sep 26 - Oct 02, 2005

"The government has gone out of its way to facilitate the business community and restore their confidence"

Despite initiating economic-friendly policies, simplified tax collecting procedure and reduced number of taxes by the government, the business community is not responding positively in terms of tax payment.

Chairman CBR Muhammad Abdullah Yousuf made these remarks regarding what he observed non-cooperation from the traders, industrialists and corporate sector

"I do not see any problem in achieving the target if the taxpayers pay the taxes sincerely." These negative remarks, however, sound strange especially when the CBR is not only successfully hitting the revenue targets but even surpassing the actual revenue targets.

The CBR chief was addressing the industrialists and the business community at the SITE Association of Industry last week.

The Chairman CBR said that the government has gone out of its way to facilitate the business community and restore their confidence but the response of the business community was extremely poor and they were not coming forward to own their responsibilities.

On the question of delay in refund claims in respect of sales tax, custom etc. the Chairman CBR said that this the only agenda, which still stands unfinished and assured the claimants that they would get refunds as quickly as possible. He said there are 1,150 cases of refund, out of which 600 cases have been cleared by making a total payment of Rs. 3 billion . Besides, 500 cases are under process and Rs. 1.4 billion will be paid on this account as "we want to close this chapter by 15th October this year.

He told that 650 companies had been reconciled and notified zero-rated. In reply to a question, he told the industrialists that they may get refund within seven days on receipt of utility bills without any notification.

Adding further he said that the government has brought five major sectors of export-oriented industry in zero-rated regime. He said that out of Rs. 5 billion refund in 2004-05 these 5 sectors own 90% share. Making these five sectors zero-rated would reduce the workload of the department and the hectic efforts of the business community to get refund etc. He assured the business community that the government would soon facilitate accordingly to the remaining 10%.

Instructions have been given to Sales Tax Collectorate (Enforcement) that all manufacturers-cum-exporters who have been made zero-rated from July 1, 2005, have also been declared zero-rated for payment of sales tax on utility bills. The refund claims submitted by them should be paid within the specified period.

The exporters are required to submit the claim application with the copy of paid utility bill along with a recommendation letter from the concerned association that the applicant is a member and a genuine exporter.

Replying to a question regarding discrimination in incentives between existing small companies (registered before 30-6-2005) and small companies registered on and after 1st July 2005 (Section 153(5)(d) read with 2(59A), Abdullah Yousuf said that the CBR is looking into the possibilities to resolve this issue.

Regarding acute shortage of caustic soda being faced by the export-oriented industries, the Chairman CBR said that he is aware of the problem and the CBR is trying its hard to resolve it in consultation with the local manufacturers, adding that the supply position would hopefully improve soon.

Earlier welcoming the chief guest, Dr. Mirza Ikhtiar Baig lauded the government's consistent policies, structural reforms and tireless efforts by which the country's economy has registered an impressive growth with good micro and macro economic indicators. The world in general, and international donor agencies and even critics in particular, have acknowledged the same, as it is a fact, he added. Ikhtiar Baig said that being the Chairman of this august body, he had been regularly acknowledging all these achievements in his TV interviews, newspaper columns and articles in magazines simply because Chairman CBR and his team deserve this great appreciation on its merit. The business community is proud of him, he added.

He said that the business community had always found Abdullah Yousuf positive with pragmatic approach and accepting challenges to address pending issues since he has taken over as Chairman of Central Board of Revenue. The business community has witnessed revolutionary steps taken by him which have transformed the economic growth of Pakistan. For instance, he said, self-assessment scheme of Income Tax is a policy people could not have dreamed of, besides discontinuation of Sales Tax Audit also on self-assessment basis and the latest one - the New Care System of assessment for the fast and expeditious clearance and dispatch of goods in few hours through fully electronic system without any paper/document and the most vital revolutionary provision of inducting zero-rated regime for five export-oriented industries on the initiative and suggestion of SITE Association would have a far reaching impact on the export-oriented value-added industries.

He also thanked former SAI Chairman, M. Zubair Motiwala, who as Convenor of Rationalization of Tariff Structure of Textiles and his team presented the practical recommendations and suggestions for this zero-rated regime, without which it would have not been possible.

Dr. Mirza Ikhtiar Baig congratulated Chairman CBR Abdullah Yusuf and his able team for presenting such a wonderful system which is not only practical but has also minimized the difficulties of the tax payers / exporters to a great extent. Now they do not seem as much varied as they were in the past. In this context he gave an example that when his secretariat contacted the members to furnish their issues to prepare the agenda of the meeting, some of the multinationals like Siemens, Hino Pak said that they do not have issues except the delay of sales tax refunds.

Drawing the attention of Chairman CBR he said that the SITE Association is still awaiting his confirmation for the think tank to give him good advice and policy recommendations for the economic growth, quantum jump in export, accelerating pace of SMEs as vendor industries and overall industrialization in the country. SITE Association is ready to extend full support and cooperation to CBR to prepare a master plan and a roadmap to achieve the desired goals fixed by the present regime, he added.

Adding further Dr. Mirza Ikhtiar Baig said that recently, the President ADB had stated that if enabling environment and required infrastructure is provided nobody can stop Pakistan become the Asian Tiger. Pakistan has to play a vital role in the South East Asian Region hand in hand with public and private sector. "I can assure you that we, the private sector, feel comfortable working with you because of your positive and pragmatic approach," he added.