The Pakistan Business Council (PBC) has urged the Federal Board of Revenue (FBR) to revise its FASTER-based sales tax refund policy, calling for an increase in the refund processing limit to 12% for all exporters. This recommendation aims to ensure equal benefits for all sectors, eliminating the disparity between erstwhile zero-rated industries and other exporters.

Unequal Refund Limits Hurting Exporters

In September 2024, the FBR introduced a policy extending FASTER-based sales tax refunds to all exporters. However, while the previous zero-rated sectors were granted a 12% refund limit, other exporters were initially capped at 5%. In January 2025, this limit was further reduced to just 3%, exacerbating financial pressures on businesses.

Challenges Faced by Exporters

The reduction in refund limits has created severe difficulties for exporters, including:

  • Increased Working Capital Constraints: Limited refund access restricts liquidity, making it harder for exporters to manage operational expenses.
  • Delays in Refund Processing: Manual refund procedures beyond the 3% cap add unnecessary administrative hurdles, leading to financial strain.
  • Competitive Disadvantage: Exporters outside the erstwhile zero-rated sectors face an uneven playing field, impacting their global competitiveness.

PBC’s Appeal to the FBR

The PBC has formally requested the FBR to restore fairness by raising the FASTER-based refund processing limit to 12% for all exporters. This move would streamline cash flow management, enhance export competitiveness, and reduce administrative bottlenecks.

Conclusion

Ensuring equal refund policies for all exporters is crucial for sustaining Pakistan’s export sector. The PBC’s call for a 12% refund limit aligns with global best practices and supports economic growth by easing financial burdens on businesses. The ball is now in the FBR’s court to implement this much-needed revision.