Pakistan Business Council Raises Alarm Over Capping Sales Tax Refunds 

Pakistan Business Council (PBC) has expressed serious concern over the capping of sales tax refunds at 5 percent of export proceeds for exporters outside the erstwhile zero-rated sectors.  In this connection, the PBC has written a letter to Dr Najeeb Ahmed Member (Inland Revenue Policy) Federal Board of Revenue.  The PBC letter revealed that the PBC has appreciated the issuance of SRO 1507(1)12024 dated September 24, 2024, which extended FASTER-based sales tax refund processing to all exporters.  However, the PBC had highlighted its concerns regarding the capping of refunds at 5 percent of export proceeds for exporters outside the erstwhile zero-rated sectors, while a 12 percent limit was maintained for those within these sectors.  The PBC had requested for a revision to align the limit for all exporters to 12 percent, ensuring a level playing field. Unfortunately, instead of addressing its concerns, the refund processing limit for exporters outside the erstwhile zero-rated sectors has been reduced to 3 percent from January 2025. This change has exacerbated the difficulties faced by exporters, resulting in increased delays, working capital constraints, and administrative burdens associated with manual refund processing beyond the prescribed limit. In light of the above, we earnestly request that FBR reconsider the existing restrictions and restore parity by increasing the FASTER-based refund processing limit to 12 percent for all exporters, in line with the facilities available to the erstwhile zero-rated sectors, PBC’s letter added.