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Parameters devised for speedy sales tax refund

ISLAMABAD (December 14 2004): The Central Board of Revenue (CBR) has devised 10 major parameters to categorise exporters under 'green', 'yellow' and 'red' channels for speedy payment of sales tax refund to exporters.

Official sources told Business Recorder here on Monday that the exporters would be brought under the 'high-risk' or 'low-risk' category on the basis of these parameters. The new system will be fully operational by March 2005 whereas the profiling of exporters on the basis of new parameters will start from January 2005 as pilot project at Lahore.

Officials said that CBR would not disclose the parameters to the business community to ensure smooth working of the system.

It is general practice all over the world that such parameters are not disclosed to the taxpayers. In UK or other countries where VAT system is considered as the best in the world ranking, the parameters remained confidential. Thus, the CBR has no intention to disclose these standards.

However, officials said that claimants would be categorised on the basis of past record, annual turnover and overall status of exporter under the existing rules. The exporters with good past record will be considered as 'low-risk' under the new rules and could be given 'green' channel facility for speedy payment of refund.

The manufacturers-cum-exporters and commercial exporters would be profiled on the basis of these criteria and on the recommendation of a special committee comprising senior sales tax officials. These profiles, along with the electronic data of the refund claim, shall be used by STARR for automated processing of the refund claims.

Under the new procedure, there would be a central refund office in the CBR for payment of refund claims' selected on the basis of automated parameters approved by the Board.

The 'green channel' means the channel for immediate payment of refund claims, while the 'yellow channel' would deal with the exporters where scrutiny of refund claims is required. However, claims under 'red channel' would need detailed scrutiny and verification of these refund claims.

In case refund claim is assigned to the 'Green' channel, the tax official will only cross-match the supportive documents with the pre-designated electronic format to verify whether the claim is properly supported by documents or not.

If a 'high-risk' exporter is referred to 'Red Channel' for audit during processing of a specific claim, it does not mean that every time on filing of refund application, he will have to go through strict checking. Other claims of the same exporter may be processed through 'Green Channel' subject to submission of supportive documents.

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