KARACHI, June 19: Pakistan Leather Garments Manufacturers and Exporters Association (Plgmea) has criticised double tax on leather garment industry at the import and export stage.

Plgmea chairman Fawad Ijaz in a statement on Thursday that the federal budget 2008-09 imposed two per cent withholding tax on all imports and exemption certificate for this tax is not being issued to the manufacturer-cum-exporters.

As a result of this, he said, now exporters will have to file claims for refund of withholding tax, which is a very lengthy process and will block huge funds of the exporters with income tax department.

Mr. Fawad explained that the export proceeds of leather garment exporters were already taxed at 1 per cent under section 154 of Income Tax Ordinance 2001, which is considered full and final discharge of tax liability of the exporters.

Manufacturers-cum-exporters, who were registered in the Sales Tax department, were exempted from 1 per cent withholding tax at the import stage vide the federal budget 2006-07.

Previously, the income tax department was issuing exemption certificates to the manufacturer-cum-exporters so that they did not have to deposit withholding tax at import stage. Now 2 per cent withholding tax has been imposed on all imports in the new budget.

He further said that the exporters, who have already got exemption certificates valid till June 30 are also being charged 2 per cent withholding tax on imports from June 12.