KEPZ investors urge government to withdraw general sales tax
A newly-inducted GE locomotive is being offloaded at the Karachi port on Monday. PHOTO: APP
Businessmen have urged the government to withdraw the general sales tax (GST) imposed on the industries in Karachi Export Processing Zone (KEPZ).
Talking to The Express Tribune, businessman Ahsan Ali, operating in KEPZ, underlined that all export processing zones worldwide “are duty-free zones”.
He mentioned that the government applied GST only in KEPZ, and not in any other export processing zone of the country, which “is not a balanced decision”.
He pointed out that a few businessmen were allegedly misdeclaring their imports, which led the government to slap GST.
“Customs should improve its system to catch these criminals instead of punishing everyone,” he emphasised.
Another businessman from KEPZ, Khadim Ghulam Hussain, revealed that the zone had filed a case against the government’s decision.
Currently, the companies were paying 5% GST through post-dated cheques, he said.
“The government will refund them if they win the case, otherwise businessmen will pay the remaining 12% GST,” he pointed out.
Echoing the viewpoint of Ahsan Ali, Union of Small and Medium Enterprises (Unisame) Chairman Zulfikar Thaver mentioned that a few businesses in the EPZ had allegedly indulged in smuggling of dutiable and banned items along with the permissible items in containers.
“This had led the government to impose GST on KEPZ,” he said and was of the view that the government should not penalise all business units in the zone just because of the wrongdoing of a few.
He urged the government to withdraw the notification and “prevent the majority of SMEs (small and medium enterprises) from the blockage of funds and hardships”.
Thaver noted that SMEs and entrepreneurs in the zone were badly affected by the imposition of GST, mainly due to the blocking of funds.
“There is speculation that a majority of the units will shift to Sharjah Export Processing Zone because of the GST imposition,” he underlined.
“It is not a wise decision,” he remarked, adding that the government would not benefit from it as “GST is refundable on exports of goods”.
However, about the refunds, he mentioned that the process “takes a very long time”. “Refund agents and departments keep pointing out objections and delaying the process,” Thaver lamented.
Regarding the malpractices, he emphasised the need to have a strong and strict monitoring mechanism through modern technologies like scanners, cameras, etc.
However, measures like the imposition of GST would violate the 30-year agreement offered by the government and raise doubts about good policymaking and governance in the country, he underlined.
“The repercussions will be bad,” he said, adding that it would create a trust deficit among investors about the inconsistent government policies.
“The EPZ employs almost 70,000 labourers and there are more than 200 units,” he pointed out.
Alpha Beta Core CEO Khurram Schehzad underlined that export processing zones or special economic zones “are supposed to be incentive-driven”.
Therefore, in order to attract planned investments, they should be treated in the same way, he emphasised.
Published in The Express Tribune, February 15th, 2022.
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