Textile industry rejects revised withholding tax

Published: February 27, 2013

Government enhanced the scope of the sales tax withholding regime to all registered companies and exporters to deduct 20% of the payable sales tax on all purchases. DESIGN: FAIZAN DAWOOD

FAISALABAD: The textile industry rejected the Federal Board of Revenue’s move of extending the imposition of the withholding tax they fear the step will affect exports adversely.

Earlier, the government enhanced the scope of the sales tax withholding regime to all registered companies and exporters to deduct 20% of the payable sales tax on all purchases. The decision took effect from February 14.

Pakistan Textile Exporters Association Vice Chairman Muhammad Asif, in a press statement, said this move will not only increase the cost of doing business but will also hit their cash flows hard. The statutory regulatory order (SRO) was issued without any prior notice or consultation with the business community.

Asif went on to say that the move was purely a revenue generation measure as the FBR was struggling to achieve its highly ambitious tax collection target of Rs2.381 trillion.

During the first seven months of fiscal 2013, the government collected only Rs1.03 trillion, 43% of the annual target of Rs2.381 trillion.

PTEA believes that such changes will not raise additional revenue for the national exchequer rather they will create hardship for smooth running of businesses.

The role of the FBR should not be only to collect taxes but ensure an enabling environment through policies which could enhance exports, trade, commerce, industrialisation and creation of jobs, he commented.

PTEA’s vice chairman demanded withdrawal of the withholding tax SRO 98(I)/2013 which had been issued without prior consultation and will lead to a decrease in exports.

Published in The Express Tribune, February 27th, 2013.

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Reader Comments (2)

  • Haseeb Khan
    Feb 27, 2013 - 3:49PM

    SRO 98 of 2013 is totally illegal.
    There can be no concept of Sales Tax withholding. Sales tax is payable on sale and it is value added tax. This SRO will choke the business and is anti business SRO of FBR. pakistan Bedsheet Exporter Association and Towels Exporters have already demanded the withdrawal of this SRO

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  • ahsan
    Mar 2, 2013 - 6:09PM

    This SRO will hit the manufacturing industry of Pakistan badly. It will kill the exports. Already these no gas given to the textile industry of Pakistan specifically Faisalabad and already the orders are pending and the owners of textile industries are worried that how will they deliever the order on time!

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