Leather sector owed millions in duty drawbacks

Pakistan
Published:  02 January, 2014

The leather industry’s outstanding duty drawback refunds for the last fiscal year (2012-13) are worth over Rs600 million (US$5.7 million) have been pending from different revenue collecting agencies for several months say the Pakistan Tanners’ Association (PTA). 

Leather industry representatives have questioned how the FBR would handle the cases after ending the zero rating regime and piling up more cases of refund claims when about Rs600 million (US$5.7 million) of just PTA members’ refunds of sales tax and duty drawback regime are already stuck with the government departments creating a liquidity crunch and hampering the export growth. “Almost 50% leather industry related exporters have complained of unreleased amounts worth around Rs150 million (US$1.4 million) under duty drawback and if calculated the total amount of sales tax refund and rebate claims of the whole leather sector it will mount to over Rs600 million, Pakistan Tanners Association central chairman Sheikh Saqib Saeed Masood observed.

Sh Saqib said that growth in leather exports have come to a halt and a gradual meltdown in exports had started. He urged the government to focus on consolidation and strengthening of the economy and uplifting the industrial productivity in the country. He said that in 2005, the FBR had declared leather, textiles, surgical goods, sports goods and carpets as zero-rated sectors to encourage exports and ensure relief to exporters from cumbersome refund process but the ending of the zero rating scheme has pushed them again into the refund regime.

Sheikh Saqib Saeed Masood said that Association’s member exporters feel it very hard to continue their business smoothly in the wake of a host of challenges marked by power and gas crisis, law & order concerns and rising costs etc.

Non-payment of their refund claims of millions of rupees has further exacerbated leather makers grievances. It has become impossible for them to meet the commitment of foreign buyers’ export orders. This situation is quite alarming. It is not only detrimental to leather industry but also a colossal loss to the national kitty say the PTA.

Source: The Nation