KARACHI:
Federal Finance Minister Dr Abdul Hafeez Shaikh has consented to maintain tax exemption for five key export sectors on their sales abroad and for supply to registered persons, businessmen say. These export sectors included textile, leather, sports goods, surgical instruments and carpets.
In a meeting with representatives of the Karachi Chamber of Commerce and Industry (KCCI) and other stakeholders in Islamabad on Saturday, Shaikh assured the businessmen that this would be a long-term policy for a period of at least three years.
A press statement of KCCI informed that the finance minister agreed that taxes should be such that local textile products remain competitive against smuggled goods coming under the garb of Afghan transit trade. He also expressed his concern over the inflationary impact of taxes on poor people.
It was decided that zero-rating will remain intact if the supply chain is completed from spinning to finished product by registered person to registered person.
It was further decided to have two rates of tax - six per cent at the yarn stage and four per cent for any value addition at their invoice value which would be charged only from unregistered persons on the basis of the value of their supply.
Issues pertaining to withholding tax were also resolved by reducing the rate from 3.5 per cent to one per cent on goods and services while federal excise duty will remain zero.
They also decided to form a committee to discuss the parameters for audit. Zubair Motiwala and Haroon Farooki were nominated for representing KCCI in the committee. The finance minister promised to solve all problems of the textile sector according to their demand.
Published in The Express Tribune, March 27th, 2011.
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