Expressing concern over the Finance Act 2024, the value-added textile exporters have urged the government to revisit the shift from the final tax regime to the standard tax in the budget for fiscal year 2024-25 as exporters are considering shutting down their units or moving businesses abroad.
They made the appeal at a joint meeting of the Pakistan Hosiery Manufacturers and Exporters Association and Pakistan Readymade Garments Manufacturers and Exporters Association, which was attended by industry representatives from Lahore, Sialkot and Faisalabad.
Meeting participants expressed fear that several industrial units had announced their closure, which would lead to a decline in exports, mainly due to high production costs amid huge taxes, and high fuel, electricity and gas rates. PHMA Senior Vice Chairman Amanullah Khan pointed out that exporters had been brought under the normal tax regime, which would open the doors to harassment, while 1% turnover tax would still be applied as a minimum tax.
“At the end of the year, additional taxes will be collected under the normal tax regime, which is not acceptable,” he remarked. “Exporters will face a 1% advance income tax, collected by specific withholding agents at the time of realisation of export income.”
The tax burden has weakened the industry and prevented it from running at a full scale, pulling down output and pushing up costs. The government has slapped huge taxes on the export sector, estimated at up to 42%, but shied away from establishing a mechanism to release tax refunds on time, he said.
Khan underlined that Pakistan had 12 million National Tax Number holders, but due to the complex tax system, only 4.5 million filed tax returns. He lamented that the income tax commissioners, who used to issue complete exemption certificates under the old law for the exempted income, could now grant a maximum exemption of up to 80%, sparking fears among exporters.
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