According to a ministry’s notification issued on Sept 1, 2009, all manufacturing units having processing, knit-to-shape or in-house stitching and cutting facility in garments, home textiles and processed fabrics will be entitled for drawback on local taxes.
The facility became effective immediately and all shipments made on or after Sept 1, will be eligible for getting drawback on taxes.
However, the most confusing thing about this notification is that initially it allowed drawback to units located in tariff areas of the country but only five days later the same facility was extended to units located in EPZs.
Exporters see a major flaw in this facility as all units in EPZs enjoy immunity from taxes and duties, therefore, there was no reason to allow them the drawback facility as was allowed to the units located in tariff areas, they added.
The State Bank has given separate country-code to the Export Processing Zones Authority because all supplies from Pakistan (tariff areas) to EPZ units are made against E-form and are treated as exports, hence are entitled to all incentives available on exports made overseas.
Exporters requesting anonymity further said that fabrics and garments exported from Pakistan to EPZ units were entitled to claim drawback, therefore, exports from EPZs to abroad can not be considered for drawback as it would lead to double claims.
As a result of this flaw exports destined for overseas would be routed through the EPZs to claim double benefit of drawback, thus defrauding the government.
The exporters said that since units located in EPZs did not pay contributions on account of social security, old age benefits, export development fund and property tax, there was not reason, whatsoever, to allow them the drawback facility.
They further argued that exports of these units did not form part of exports from Pakistan as their shipments were exempted from submission of E-form.
Furthermore, since Foreign Exchange Act is not applicable to EPZ units, export remittances are not surrendered to the State Bank and retained in foreign exchange by the EPZs exporters.
They urged the textile minister to personally intervene and correct the flaw as it would badly damage the interest of the tariff area units and would hamper their exports.
No comments:
Post a Comment