Textile industry rejects revised withholding tax

FBR has imposed a 20% tax on companies, exporters to boost collection.

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 27^th, 2013.

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