Ahead of budget: Exporters seek restoration of zero-rating facility

Huge amount stuck in refund claims has squeezed their finances.


Imran Rana May 26, 2015
PHOTO: FILE

FAISALABAD: With the budget just around the corner, textile exporters have stressed the need for zero-rating sales tax for the export-focused industry, considering that huge amounts are still stuck in refund claims, squeezing finances and causing cash-flow problems.

Inviting attention of the government, Pakistan Textile Exporters Association (PTEA) Chairman Sohail Pasha and Vice Chairman Rizwan Riaz Saigol termed the liquidity crunch a major stumbling block in the way of improving exports.

The textile industry has been facing unprecedented challenges for years and consequently, its capacity has been severely impaired. Exports, both in quantity and value terms, could not pick up pace and have stood below targets.

They said withdrawal of the zero-rating facility and imposition of sales tax would be detrimental to business activities as around 80% of textile products were exported in one form or other, with only 20% left for domestic consumption.

Therefore, “zero-rating of the entire value chain for exports is imperative to remain competitive in the international market.”

Exporters say they are trapped in a vicious cycle of sales tax payment and refund claims with changes in the Statutory Regulatory Order.

Initially, five export sectors were declared zero-rated but subsequently the facility was gradually withdrawn. The SRO should be restored to its original status to declare textile exports zero-rated, they emphasised.

Urging the government to release immediately the huge amount stuck in tax refund claims, the PTEA chairman said finances were imperative to run the industry without which no one could even think of surviving.

“The government should set its priorities right and accord preferential treatment to the export-focused textile sector to fulfill its vision of economic stability and prosperity,” he said.

Published in The Express Tribune, May 27th,  2015.

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