Plea: Textile sector appeals to reduce sales tax

Increase from 2% to 5% has the potential of crushing country’s exports.

KARACHI:

Value-added textile sector has urged the government not to increase sales tax from the current 2% to 5% as it will increase corruption in the system and adversely affect the export-oriented industries.

“With a sense of grave concern we have learnt that the increase in sales tax on exports from 2% to 5% is on the cards and the government will be imposing 5% on exports,” a joint statement of the value-added textile sector said on Tuesday.

The statement said that the value-added textile exporters are already burdened due to the rising tariff of electricity, gas and other essential raw materials leading to high costs of doing business in Pakistan compared to competing countries.

Several exporters’ face a liquidity block with the sales tax refund claims amounting to billions of rupees; customs rebate claims of billions of rupees and Rs15 Billions of DLTL claims which are held up by the government for an abnormally long period of time. (DLTL Claims outstanding for the last three years).

The value added textile export sector has been demanding “No Payment No Refund Regime” to eliminate tax frauds. The system of collecting sales tax and then refunding is not only a futile exercise but requires a lot of time and money. The 5% sales tax on exports would amount to a fatal stab in the back of the exporters.

Published in The Express Tribune, May 14^th, 2014.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.