Automated System for Duty Refunds is Now Fully Operational

The automated Duty Drawback (DDB) System is now fully operational. The system was conceived by the Ministry of Commerce and jointly implemented by Pakistan Customs and the State Bank of Pakistan (SBP).

A total of 7,998 claims amounting to refunds of around Rs. 953 million have been processed through the system up to October 20, 2020. This was told in an internal briefing at the Ministry of Commerce today, chaired by the Advisor to the Prime Minister on Commerce and Investment, Abdul Razak Dawood, and attended by senior officials of the Ministry.

The automated DDB system is a risk-based system, operationalized on September 30, 2020, which aims to provide a hassle-free facilitative environment without human interaction for the export sector by direct transfer of duty drawback to the accounts of exporters.

This step, along with the ongoing exercise of revision of rates of duty drawback for various sectors, has been taken to address the longstanding issues of exporters regarding the refund claims.

A fundamental principle of exports, under international agreements, is that there will be no duties, levies, or surcharges on the export of goods. In the briefing, it was maintained that this principle was not followed in letter and spirit in Pakistan, as the duty drawback in the past were calculated with an approach to earn more revenue rather than to facilitate exports.

The Advisor was further briefed that the process for corrective measures was initiated last year. The IOCO (Input-Output Conformance) did some quality work regarding the recalculation of DDB, which has resulted in a revision of rates for a number of sectors, while the exercise is ongoing.

The other major issue was the delays in payments which have now been resolved with this automated system.

The Advisor to the Prime Minister appreciated the role of Pakistan Customs and SBP in the implementation of the automated DDB system. Talking about the system, Dawood said that this will be major facilitation to our exporters because it will enable them to make adjustments in their pricing policy to have an edge over the competitors. Dawood added that a similar automated system shall be put in place for other refunds as well, including Sales Tax and Income Tax, to further facilitate the export sector.

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