Textile value-added sector opposes sales tax on exports

E-Paper | July 02, 2026

KARACHI: The value-added textile sector has taken strong exception to the government proposal of imposing 5.5 per cent sales tax on its exports in the budget 2014-15.

Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Zonal Chairman South Arshad Aziz, Towel Manufacturers Association (TMA) Senior Vice-Chairman Iftikhar Ahmed Malik, Pakistan Cloth Merchants’ Association (PCMA) Chairman Abid Chinoy and Irfan Z Bawany of Pakistan Hosiery Manufacturers Association (PHMA) talking to Dawn on Saturday said that the move would be disastrous and further put them at disadvantage against regional rivals.

They were highly critical of the idea since exporters were already paying 2 per cent sales tax and 0.25pc export development levy.

They said that billions of rupees were already stuck up with the Federal Board of Revenue (FBR) towards rebate, sales tax refund and duty drawback causing acute liquidity problem for exporters to meet their export orders.

“Therefore imposing further tax would completely deprive the export trade of much-needed liquidity,” they added.

They accused the FBR of deferring payments up to 50 per cent of sales tax refunds and it has accumulated into billions of rupees.

The leaders pointed out that growth in textiles and clothing exports of regional countries stood fabulous when compared with Pakistan.

They said that the cost of doing business in Pakistan was the highest in the region.

In wages Pakistan is second to India but in interest rate and power rates it is highest. Similarly, in gas tariff Pakistan is higher than India but lower than Sri Lanka.

Published in Dawn, June 1st, 2014

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Jun 02, 2014 12:55am

Exports earn foreign exchange for the country and they directly impact the trade balance and the overall economic health of the Nation. There should be no sales tax or any kind of tax on exports. Even developed countries do not impose sales tax on exports to grow their economies. Instead of increasing taxes, the government needs to drastically reduce its expenses for a economically healthy Pakistan. Every one knows that the Government machinery is way too large, bureaucratic and unnecessary. The ruling party needs to focus on significantly reducing the size of the government in order to reduce expenses.

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Just Someone

Jun 02, 2014 01:38am

If you go as a tourist to Europe, the 17.5% sales tax that you pay on your purchases gets reimbursed at the airport when leaving EU. They are considered as exports and are exempt from sales tax.

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Just Someone

Jun 02, 2014 01:41am

Why doesn't the government make things simple. If there has to be a sales tax refund, why collect it in the first place.

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