Salons can’t see the light on VAT issue

Saadia Qamar May 12, 2010

KARACHI: The government’s plan to bring in beauty salons into the tax-paying bracket is being met with consternation by salon owners.

Value Added Tax (VAT), which will be levied this July, will be imposed on fashion designers, beauty salons, caterers, retailers and other service providers with an annual turnover of Rs7.5 million. While services at some of the country’s top-tier salons can cost up to Rs10,000 and above - more so for bridal make-up - the overheads have increased given the costs of importing goods and electricity.

The Express Tribune spoke to a number of salon owners who could not understand the government’s decision. Pivot Point’s Daulat Rahimtoola, who is one of the pioneers in the salon services industry said, “On what grounds does the government intend to put this Value Added Tax on us? The country itself is not a luxurious country, we barely make ends meet. We live from hand-to-mouth and now they want to take away what is going into our mouth.”

Rahimtoola told The Express Tribune, “I believe everyone is upset about it, and there are certainly disadvantages to it, (the big question) remains how we are going to cope with it. The country is going through so much stress and I have my doubts about this.” Aliya Tipu of Alle’nora took the same stance as Daulat Rahimtoola. She told The Express Tribune, “This Value Added Tax (is affecting) the smaller industries like salons. We are already paying taxes on so many other items. The make-up products are very expensive and now they want us to pay this tax too.” Tipu believes that salon owners must meet and act on the situation before VAT is levied on salons at the start of the financial year.

Bina Khan, who runs a salon in Karachi, told The Express Tribune, “They don’t go feeding the poor with our tax money. VAT will make no difference to that. I believe nobody is reliable and answerable. Where is this money going, after taxing the rich? Thank goodness, for once they are not taxing the poor!” Khan also believes that focus needs to be on other problems, “I am not an economist - what do I know about inflation dropping or not - but I believe our country is going through much larger problems than this VAT.” Shahzad Raza of Ather and Shahzad told The Express Tribune, “It is not fair of the government to impose VAT on us.

As it is, sales are going down, and with this new tax more businesses will suffer and will shut down. The government must deal with us with a lighter hand. We are not doing really well in this business and what we are providing is not basic necessity but its luxury and comfort. Lots of people will stop visiting us. We are already paying for everything from electricity to water and now this new tax too.”

Published in the Express Tribune, May 13th, 2010.


Meekal Ahmed | 13 years ago | Reply I agree completely with Mr Jafri. If they are small, they are below the threshold so they don't pay VAT. If they are big, then they pay the tax.
sam | 13 years ago | Reply what about the gali wala salons? arent they affected by the VAT? would have been nice if the reporter went to salons that treat the masses and found out if eye brow shaping or waxing charges would increase after the VAT. leg work never harms, rather adds to the story.
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