Textile value-added sector opposes sales tax on exports

Updated June 01, 2014

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- File Photo
- File Photo

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