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News Clips 3 April, 2013



[ FBR's Crest not user-friendly: PRGMEA ]
[ Amnesty for textile defaulters extended ]
[ Aptma deposits Rs4bn in unpaid sales tax ]
[ Textile sector: 'Crest' and filing of special return not interlinked ]
[ Textile units stay closed for 5th day in absence of gas ]
[ WeBoC glitch irks exporters ]
[ Indian home textiles market growing in leaps & bounds ]
[ Bangladesh strikes cause apparel industry concerns ]

FBR's Crest not user-friendly: PRGMEA   [ top ]

BUSINESS RECORDER, Recorder Report, April 2, 2013
The Zonal Chairman of PRGMEA, Shaikh Mohammad Shafiq has said that the FBR's recently launched software to check claims for bogus refunds and illegal input tax adjustments against fake and flying invoices is full of discrepancies and errors.

He said that the Computerized Risk-based Evaluation System (Crest), developed by FBR to implement SRO No 179, is not user friendly and a very complex interface. The exporters are unable to use it effectively, moreover, news reports claim that even the tax officers are still unable to operate the said software, therefore, how can it be expected that exporters will use it with ease?. Exporters have been asked by the FBR to submit data for the past 20 months (from July 2011 till February 2013) and have been given a deadline of March 31.

Shafiq said that it is not possible for any company to reconcile their 20-month data within this short time period. He said that last digit of NTN number is missing in the software which makes it very difficult to sort out relevant data. He asked the FBR to remove the discrepancies from CREST and make the software user friendly. He also urged the FBR to extend the deadline giving ample time to exporters to reconcile their sales tax invoices.

Amnesty for textile defaulters extended   [ top ]

THE NEWS, Mehtab Haider, April 2, 2013
ISLAMABAD: Giving a further relaxation to textile companies, the Federal Board of Revenue (FBR) decided on Monday to extend the tax amnesty scheme by another 15 days, sources said.

They added that the defaulting textile companies can now pay two percent of total outstanding tax liabilities without facing any legal action. While the decision has been taken, a notification will be issued today in this regard, they added.

The FBR had issued the statutory regulatory order (SRO 179) to allowing textile companies to pay two percent of total outstanding tax liabilities by March 31 to save from litigation. During the last four days of March, these companies coughed up Rs2.5 billion for due taxes to national exchequer, sources said.

It is expected that this figure will cross three billion rupees after the final audit, they added. According to the details, 50 textile companies availed the amnesty scheme. Some of them include Alhamd Corporation, which deposited Rs142 million, Fazl Cloth Mills Rs139 million, Colony Mills Rs84 million, NP Cotton Mills Rs73 million, Thal Limited Rs70 million, Diamond International Corporation Rs66 million, Gadoon Textile Mills Ltd Rs52.4 million, and Saif Textile Mills paid Rs51.142 million.

The FBR had clarified that all those who would clear tax liabilities even without submitting prescribed tax returns till the deadline would be pardoned. However, nonpayer has to face the music, it said.

“We have designated special teams in all regional taxpayer offices and authorised them to take stern action against those who could not avail the opportunity,” FBR’s Member Inland Revenue Operation Reza Baqir said on Sunday.

Aptma deposits Rs4bn in unpaid sales tax   [ top ]

DAWN, Nasir Jamal, April 3, 2013
LAHORE, April 2: Federal Board of Revenue (FBR) Chairman Arshad Hakeem on Tuesday said the board had recovered a major chunk of the unpaid sales tax from the textile mills on account of their local sales.

Speaking briefly to the media during a press conference called by the All Pakistan Textile Mills Association (Aptma) by telephone from Islamabad, the chairman said the board had succeeded in recovering the tax with the active help of the Aptma leadership without scandalising the industry.

Arshad said the board had used information technology to detect the anomalies in the payment of sales tax by the industry. The FBR chief however did not give the exact amount of tax deposited by the textile mills on account of their local sales during the last 20 months, but Aptma leaders said that the total amount deposited was nearly Rs4bn.

They claimed that the 95 per cent of Aptma members had cleared their tax obligation although majority of them was not legally bound to pay the amount.

The FBR on the request of the Aptma leadership extended the amnesty for another 15 days to April 15 in order to give another opportunity to the mills, which had so far not deposited the tax or had made partial payments.

The list prepared by the Lahore Large Taxpayers Unit (LTU) of the top defaulting companies, which have not paid their tax liabilities at all include (outstanding tax given in brackets):

Al-Hamd Garments (Rs171m), Younus and Associates (Rs111m), Rida Cloth (Rs96m), Al-Abid Enterprises (Rs56m), Usman Cotton Factory (Rs45m), Siddique Sons (Rs43m), S.M. Textile Industries (Rs42.5m), Mahmood Ahmed Weaving Factory (Rs41m), Zeenat Impax (Rs39m), H.A. Textiles (Rs39m), Naseem Textiles (Rs36m), Kh. Muzafar Mahmood M. Masod L/O Mahmod C/G & P/O (Tatapur) (Rs35.6m), S.S. Traders (Rs35m), Babri Cotton Mills (Rs34m), Pakeeza Traders (Rs34mn), Hamza Apparel (Rs29m),Khawaja Bashir Ahmed & Co (Lodhran) Cotton & Oil (Rs28m), Ahmed Cotton Industries (Rs27m), S.M.H. Textile Industries (Rs27.5m), Gulistan Weaving Mills (Rs26m), Margalla Industries (Rs26m), A.I. Garments (Rs26m), Ammar Textiles (Rs25m), Kanwal Cotton Ginners and Oil Mills (Rs25m), Hamza Import and Export (Rs25m), Apollo Textile Mills (Rs25m), National Tent House (Rs25m), Elite Clothing Company (Rs24m), New Global Packages (Rs24m), High Fashion Textile (Rs23mn), Abdul Sabur Textiles (Rs23m), N.P. Spinning Mills (Rs23m) and Al Basit Cotton Ginners (Rs23m).

The top defaulting companies, which have made only partial payments include (outstanding tax given in brackets): Ibrahim Fibres (Rs67.5m), Hiba Textile (Rs56.7m), Saif Textile Mills (Rs51m), Rahman Cotton Mills (Rs47m), Janana De Maluchu Textile Mills (Rs47m), Gatron Industries (Rs46.5m), Amin Textile Mills (Rs35m), Kohinoor Textile Mills (Rs33.4m), Gulistan Textile Mills (Rs33m), Royal Textile Mills (Rs33m), Kohat Textile Mills (Rs32m), Mahmood Textile Industries (Rs27m), Sargodha Spinning Mills (Rs27m), Acro Spinning & Weaving Mills (Rs26m), Dewan Mushtaq Textile Mills (Rs25m), A.J. Textile Mill (Rs23m) and Sarhad Textile Mills (Rs23m).

The Aptma leaders said the confusion regarding payment of sales tax was spawned because of zero-rating of sales for exports and five per cent sales tax on domestic consumption. This offered an incentive to many to set up fake companies and make purchases for local sales without payment of tax.

Now the zero-rating of the textile had been eliminated and all manufacturers were required to collect two per cent sales tax on their sales to registered and unregistered buyers and deposit it with the FBR under SRO 179. The exporters would however be refunded the tax on production of proof after exports, the Aptma leaders said.

The imposition of two per cent sales tax on all sales would put additional burden of Rs100 billion on the industry and “we hope that the FBR would refund the claims of exporters within 30 days as promised”. “If the FBR failed to fulfil its promise, we would be justified in demanding restoration of zero-rated regime for the textile exports,” they warned.

Textile sector: 'Crest' and filing of special return not interlinked   [ top ]

BUSINESS RECORDER, Recorder Report, April 3, 2013
The Computerised Risk-Based Evaluation of Sales Tax (Crest) and filing of special return by textile sector under SRO.171(I)2013 are not linked to each other, as the Crest is an independent system and special sales tax returns are managed by the FBR Web-Portal.

An official told Business Recorder here on Tuesday that the Crest and filing of special return under SRO.171(I)2013 are two different processes and cannot be mixed. An impression has been created that FBR newly established Crest is not user-friendly. It is further alleged that filing of the special return under SRO 171(I)2013 is fairly complex. In this context information gathered from the tax machinery and the sales tax registered persons, revealed that active problems is with special return and its uploading.

Computerised Risk -Based Evaluation of sales tax is seamless which is as simple as changing the TV. channels. It works electronically where the tax officers of the taxpayers can correspond through messaging from their elected folders. It does not provide any discrepancy to the tax machinery. The special return is not any component of Crest rather it is managed by the FBR Web Portal.

Official maintained that the Crest started finalising the returns quite recently and detected cases of billion of rupees unverifiable sales and purchases. Quite few prosecution cases were registered against such detection. Meanwhile, export associations have requested the government to charge 2 percent tax as currently this is the tax which applies to zero rated local supplies. The government had accepted their plea and issued notification SRO.179 and prescribed special return. The registered person was to feed individual invoices on which the taxpayer has to pay the tax. The Crest domain team pointed out to the FBR that such filing of individual invoices is not possible within short time and in fact the return may be routed along Crest data. It is however, found that the nature of the return and the application with which it is uploaded is quite complex. However, Crest application resolved the issue of feeding and uploading data. This evident from the fact that more than 1000 returns were filed within the short time and it was for the first time that the zero rated sectors paid more than Rs 2.4 billion. Had Crest not user friendly such filing of returns and recovery would not have been possible.

The Crest is helping the compliant taxpayers even in those areas where Web Portal which captured returns is technically complex. It is on the demand of the taxpayers that this deposit of tax on Crest detention is being extended, a lot of large and small taxpayers are approaching Crest domain Team in helping them for uploading special returns.

Textile units stay closed for 5th day in absence of gas   [ top ]

EXPRESS TRIBUNE, Imran Rana, April 2, 2013
FAISALABAD: Gas supply to Faisalabad industries could not be resumed on Monday after a four-day weekly break, prompting protests from industrialists who said suspension for long periods would exacerbate their problems and cause heavy financial losses. In a statement, Pakistan Textile Exporters Association (PTEA) Chairman Asghar Ali expressed concern over failure of the gas distributing company to restore supply to industries in the Faisalabad region as industrial production remained suspended for the fifth consecutive day.

According to the schedule put in place by Sui gas authorities, the industries were to be given gas from 6am Monday to 6am Thursday (three days in a week), but the company could not meet the schedule because of disruption in supply from Zamzama gas field, forcing all major manufacturing units to stay closed.

The company has announced a new schedule from next week, according to which industries will get gas for four days a week. “Suspension of gas supply to industrial units is sheer injustice as this has badly hurt thousands of workers besides affecting production of goods,” Ali said.

He pointed out that gas outages for four days a week had already crippled industrial activities and more stoppages would bring activities to a grinding halt and badly hit the textile industry, the largest export sector of the country.

He sought priority status for the textile industry to revive economic activities in the country.

Ali blamed the government for failing to develop a long-term strategy to tackle energy crisis and said the textile industry had been suffering a huge loss of Rs200 billion each year for the last four years because of power and gas shortage.

Though the country produced good cotton crops in recent years, the energy shortage served as an obstacle to the consumption of the crop for producing value-added products, he said. Especially, export-focused manufacturing units were facing a host of problems as they had not been able to meet shipment deadlines.

This energy problem, he said, has pushed some textile units to relocate to Bangladesh, Turkey and Sri Lanka, which are enjoying tariff concessions, easy access to export markets and satisfactory energy supply. Easy availability of utilities, low prices for utility services as well as subsidies provided by competitor governments have put textile exports from Pakistan at a disadvantage.

WeBoC glitch irks exporters   [ top ]

DAWN, Staff Reporte, April 3, 2013
KARACHI, April 2: Despite the introduction of the Web-based One Customs (WeBoc) auto-clearance system at the Air Freight Unit (AFU), Jinnah International Airport, exporters continue to face difficulties due to operational hiccups.

Exporters have complained that entries of Export General Manifest by the concerned airlines for shipments made in February, 2013 have not been logged in the WeBoc system. As a result, when the sales tax web portal for filing returns is visited, the system doest not acknowledge the transaction.

A leading value-added textile exporter and former chairman Pakistan Bedwear Exporters Association (PBEA) Naqi Bari said that the sales tax web portal seeks goods declaration number which should have been entered into the system at the time of clearance by the respective airline.

“When the manual system was in operation, there were no such problems. All this has happed because the Federal Board of Revenue (FBR) introduced WeBoc at AFU but it did not take the airlines onboard and never issued them any IDs,” he alleged. Consequently, the sales tax auto-system now declares exporters as ‘non-filer’ of sales tax and federal excise duty returns for the month of February, 2013 despite the fact that shipments had been made by exporters by air.

He urged the director WeBoC Syed Tanvir Ahmed to look into the issue and take measures to streamline the auto-clearance system at Jinnah International Airport’s AFU at the earliest and also help those exporters whose shipments were not entered into the WeBoC.

Indian home textiles market growing in leaps & bounds   [ top ]

FIBRE2FASHION, April 2, 2013
The home textiles market in India is growing in leaps and bounds since the last few years. This has come in the backdrop of a rise in disposable incomes in the last few years. The housing boom of the past years too has fuelled demand for home textiles in India. According to estimates, the current domestic market for home textiles is around US $4 billion. However, the Indian market is dominated by the unorganized sector, which has a massive 95 percent share, with the rest accounted for by branded home textile retailers.

“With organized home retailers and a larger number of national brands, the consumers have started seeing the merit of doing up their homes tastefully,” says Mr. Rajesh Mahajan, Managing Director of Maspar.

“However”, he adds by saying, “The home textiles business in India today is still about 10 years behind the apparel industry in India in terms of consumer acceptance of brands.”

Maspar is a home fashion brand and is present across the whole value chain from production to retail. The brand has also extended its footprint in to the markets of France and Canada.

When qizzed if the Indian market is as matured as those in the west, he informs, “The Indian market is still far behind the western markets in terms of product offering. In India, primarily home textiles are related to sheets, towels, quilts, curtains and upholstery.

“Very few Indian consumers look at doing the complete interior of a room at one time. Further, the extremely uneconomical rentals make it unviable to showcase home textile in a proper environment to create a desire for consumers. Product is primarily sold off the shelves with very little visual merchandising.”

The Indian home textile market is estimated to grow at a brisk 9 percent (CAGR) and is expected to reach $9 billion by 2020.

Bangladesh strikes cause apparel industry concerns   [ top ]

JUST-STYLE, Petah Marian, April 2, 2013
Ongoing general strikes in Bangladesh are raising concerns among apparel manufacturers that foreign buyers will shift their orders to other countries as they face difficulties fulfilling orders on time.

General strikes have meant that many apparel exporters have failed to meet shipping deadlines, while others have had to resort to the more costly option of air freight, consequently pushing up the overall cost of production.

According to the Bangladesh Garment Manufacturers and Exporters Association, the overall cost of production in Bangladesh's apparel sector has increased by 20% to 25% due to political turmoil and the frequent general strikes.

The minimum wage for factory workers in Cambodia's garment and footwear sector is set to rise to US$75 a month from 1 May, rising from the current $61 a month.

Local unions in Cambodia who took part in the negotiations had called for a wage hike to between US$89 and US$150 a month.