Special taxation measures to support textile sector's competitiveness amid Covid19: Experts

Islamabad: The facilitation and appropriate taxation measures could play instrumental role in enhancing the competitiveness of the textile business and to boost exports in this crucial sector of the economy. The experts on the sector from public and private sectors said this while sharing their views with the participants at an online consultative dialogue ‘Textile sector's competitiveness amid Covid19’ organized by the Sustainable Development Policy Institute (SDPI) here on Tuesday.

World Banks’s Program Lead for Growth, Finance, and Institutions, Ms Clelia Rontoyanni, while highlighting various aspects of support competitiveness in textile businesses, said that FBR has potential to support exporters in these difficult times. During the recent past, she said, several new measures have been introduced by FBR including reduction in GST rates, customs duties and ease in filing tax returns that may help in improved cash flows of exporters.  

“Tax authorities need to realize that two-third of imports are inputs for the manufacturing sector, and therefore tariffs on inputs should be lowered,” Ms Rontoyanni said and added further that tax system should be predictable and responsive to the needs of the private sector.

Mr Muhammed Raza Baqir, Former Member, Federal Board of Revenue (FBR), while sharing his observations with the participants, said that the textile sector is transitioning towards value added items. He said that Covid19 has adversely impacted textile sector, hence, measures should be taken to facilitate the sector to overcome this unprecedented situation. 

Likewise, he said, the utilization period of export schemes could be extended until June 2021 in view of Covid19. He said that rules of FBR export schemes such as DTRE were introduced almost two decades back. And hence, there is a need for complete revision. 

Former Member FBR, Ms Raana Ahmed on the occasion suggested that in view of Covid19, FBR could consider relaxing burden of direct taxes on the textile sector. She said that the current tax policy formulation process is weak and capacity for in-depth research in FBR seems lacking. The fiscal policy unit at Finance Division needs to be well capacitated and empowered. This unit should collaborate with policy think tanks. 

Dr Vaqar Ahmed, Joint Executive Director, SDPI, while moderating the consultative meeting, argued that the data regarding request for refunds should be made public and online as it would allow everyone to get a clear picture on the exporter's refunds and in case there are delays.  He said that FBR could beef up advocacy and outreach to help the private sector to become aware to avail export exemption schemes allowed for imports. 

“The pre-conditions to be eligible for such schemes at times, seem too harsh”, Dr Ahmad said and noted that such pre-conditions often prevent small exporters to access this facility. He said that modern and efficient tax systems require improved data and analytical capabilities and FBR needs to strengthen internal research capabilities. He said, frequent change in FBR's leadership has hampered the process of public-private dialogue. Such unanticipated changes are a hi ndrance in sustainability of already initiated reforms by Government.

Mr Sanaullah Abro, Director General Customs Risk Management at FBR, said that several FBR schemes are there that allow textile exporter to conduct tax free operations. Besides, several imported items have been allowed exemption from additional customs duty and FBR’s planned National Single Window programme will lead to reduction in regulatory burden, he added. 

Executive Director & Secretary General of APTMA, Mr. Shahid Sattar, was of view that the aut omation measures at FBR is yet to provide any ease to exporters. Moreover, the issues pertaining to irrational pre-conditions to claim refunds should be resolved.