Pakistan or will cancel the textile and other export industries zero tax concessions

Release time:

2019-06-13

According to a report by Pakistan's "Forum Express" on June 12, despite strong protests from Pakistan's five major export departments, the Pakistan Justice Movement Party government has revoked the zero-tax preferential measures for these industries in the new fiscal year budget, saying that this will Simplify capital flows and prevent capital outflows. On Tuesday, the Pakistani government announced the budget for the 2019/20 fiscal year, which revoked the 1125 clause of the 2011 Statutory Regulatory Order (SRO), which stipulates that no sales tax will be levied on inputs and products of five major export-oriented industries, including textiles, leather, carpets, sporting goods and surgical instruments.

Pakistan's Minister of State at the Ministry of Finance Hamad said that the purpose of this move is to solve the problem of delayed repayment. There are loopholes in the zero sales tax policy, and some non-target beneficiaries and non-exporters take advantage of this preferential policy. Tax breaks for manufactured goods also hurt revenues. He also said that in order to simplify the tax process and prevent the loss of tax revenue, the budget proposes measures to abolish the SRO1125 clause and restore the sales tax of five zero-tax industries to the standard level of 17%. He added that retailers who choose to file their taxes in real time will get preferential treatment and will be subject to a 15% tax. Jawad, chairman of the Pakistan Knitwear Manufacturers and Exporters Association (PHMA), commented that this decision violated the textile policy proposed by the PTI government before the election, and said that exporters refused to accept the government's decision to withdraw the SRO1125 clause. He predicted that the cancellation of preferential policies in the five export industries will reduce exports by 30% and deal a blow to the export industry, leading to capital flight, large-scale unemployment, huge foreign exchange losses, and the closure of small and medium-sized export enterprises.