Fruits, vegetables: Exports may face downward trend due to load of taxes: PAHF

KARACHI: Exporters have warned that export of fruit and vegetables may face a declining trend due to imposition of additional taxes on export proceeds as it will increase the financial burden on exporters and farmers, making it more challenging for them to compete in the global market.

In a letter to Prime Minister Shahbaz Sharif and Finance Minister Muhammad Aurangzeb, Shaikh Imtiaz Hussain President Pakistan Agricultural and Horticultural Forum (PAHF) has called for immediate withdrawal of new additional taxes imposed on exports in the budget FY25 and restoration of fixed tax regime to compete in the world market.

Imtiaz expressed serious concern regarding the recent imposition of taxes under Section 154. On behalf of the stakeholder of the agricultural sector, he has highlighted the negative impacts of this decision and requested reconsideration to facilitate the exporters.

He said taxing export income at corporate tax of 29 percent and applicable super tax will directly hit the exports of the country. Previously, exporters were paying one percent of export processed and it was full and final tax for the exporters.

The new tax regime will have adverse effects of the new additional taxes on export and will further burden the already struggling exporters of fresh fruits and vegetables, he warned.

He also expressed concerns over the recently introduced Section 25AB, which imposes non-bailable penalties for suspected tax fraud.

“This intention to curb tax evasion may raise several issues and there is risk of misuse and potential harassment is significant without stringent safeguards. Innocent individuals and businesses could be unfairly targeted, causing severe distress,” Imtiaz said.

Moreover, harsh penalties may deter legitimate investments, undermining investor confidence and harming economic growth. In addition, non-bailable penalties also contradict the principles of justice and fairness, eroding public trust in our legal system, he added.

He has urged the Prime Minister and Finance Minister for reconsideration of Section 25AB and requested for alternative measures to combat tax fraud that do not carry the same risks.

President PAHA mentioned that agriculture is the backbone of Pakistan’s economy and contributes significantly to GDP and provides employment to a large segment of the population.

Exporting agricultural produce not only helps in earning valuable foreign exchange but also supports the livelihoods of countless farmers and their families. The imposition of additional taxes on export proceeds will undoubtedly increase the financial burden on exporters and farmers, making it more challenging for them to compete in the global market, he said.

He said that the decision to impose these taxes may have been influenced by the demands of the IMF as part of their conditions for financial assistance. However, it is essential to balance such external demands with the needs and well-being of our local economy and citizens. Instead of imposing additional taxes, which may stifle growth and competitiveness, the government should consider alternative measures that could help meet IMF requirements without harming the export sector, he suggested.

The federal government must re-evaluate the decision of imposing taxes on the export sector to reduce the burdens on exporters so they can continue to support their vital contributions to Pakistan’s economy, Imtiaz concluded.

Copyright Business Recorder, 2024