KARACHI: For the first time in the history of Pakistan, exporters have been levied with 300% higher tax as compared to local businesses.
The federal government in its budget has facilitated the local SMEs and neglected, as usual, the SMEs of export sectors.
The value added textile sector had in its budget proposals demanded of the federal government to reduce income tax as well as sales tax rates for exporters but in vain.
Globally, there are no taxes on export businesses, and where taxes are levied on exports the rate is lower than the one levied on local businesses.
However, in Pakistan the situation is the opposite.
The value added textile sector is very disappointed that the government has not accorded consideration to its demands. This joint statement was made by Jawed Bilwani, chairman, Pakistan Apparel Forum, Riaz Ahmed, central chairman, Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, chairman, Pakistan Knitwear and Sweater Exporters Association; Feroze Alam Lari, chairman, Towel Manufacturers Association of
Pakistan; Abdus Samad, chairman, Pakistan Cloth Merchants Association, Khawaja M. Usman, former chairman, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, Shaikh Shafiq, former chairman, Pakistan Readymade Garment Manufacturers & Exporter Association, Zulfiqar Ch., chairman, All Pakistan Textile Processing Mills Association, Khawaja Muhammad Younus, chairman, All Pakistan Bedsheets & Upholstery Manufacturers Association, Shoaib Majeed, chairman, Pakistan Denim Manufacturers & Exporters Association, Naveed Illahi, chairman, Pakistan Bedwear Exporters Association, and Yusuf Yaqoob, chairman,
Pakistan Weaving Manufacturers Association.
The textile exporters demanded restoration of Zero Rating of GST -- No Payment No Refund System.
Imposition of 17% GST has made the textile exporters specially SMEs financially unviable as their precious liquidity, without any purpose, stuck up and they throughout the year face financial difficulties to fulfill their export commitments.
It is on record that 33% SME exporters have closed their export business since imposition of 17% GST which blocked exporters’ precious liquidity.
With the continuation of 17% GST in 2021-22, many more SME textile exporters who managed to survive last year shall fear closure as well in the wake of liquidity pressure.
17% GST on exports and refund after months is the key hurdle in the boost in exports.
Therefore, for the sake of survival of SMEs textile exporters and employment provided, it is highly crucial to restore no payment no refund GST regime which has been tried and tested or reduce GST rate to 5%.
Needless to mention here that the government had imposed 17% GST in 2019-20 in order to collect GST on local sales of five export sectors to which the FBR is not successful.
The FBR has miserably failed to broaden the tax base and for this purpose more than 10,000 officials of the Enforcement Department are working who are responsible to broaden the tax base.
They also expressed their concerns over and reservations about stating that the Finance Minister in the Zoom meeting, responding to the demand, had promised to suspend the EDF surcharge from now on which is deducted at the rate of 0.25% of exports value.—PR
Copyright Business Recorder, 2021
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