KARACHI: Export sector has categorically rejected budget proposals, particularly removal of exporters from fixed tax regime, and termed it a disaster for the country’s exports.
Addressing a press conference at Karachi Press Club on Saturday, Chela Ram Kewlani Chairman Rice Exporters Association of Pakistan (REAP) strongly opposed the recent announcement in the budget regarding convert of Export trade from Final Tax Regime (FTR) to a Hybrid model i.e. “National Tax Regime (NTR) Coupled with Minimum Tax Regime (MTR)” and said that this combination will be disaster for export business of country.
He said that all export representative associations including Pakistan Pharmaceutical Manufacturer Association (PPMA), Pakistan Leather Garments Manufacturers and Exporters Association, Pakistan Sports Goods Manufacturers & Exporters Association, Pakistan Knitwear & Sweater Exporters Association, All Pakistan Fruit & Vegetable Exporters Association (PFVA), All Pakistan Textile Mills Association (APTMA) and Pakistan Tanners Association are against this move.
The government is trying to get fresh loans from the international financial institutions for support of foreign exchange reserves, whereas the much earned foreign exchange export sector is being pushed toward closure, he added. He said that Current FTR regime is 1 percent turnover tax is equivalent to 30-35 percent tax on profit for exporters.
Now they are suggesting converting to NTR plus 10 percent Super Tax with minimum 1 percent paid. This means 39 percent tax on profit of exporters, he informed. “This move will create disastrous impact on export trade, as in this case FBR Officials may audit the books of accounts of exporters and may assess the profit / loss of exporters, which will open the doors of corruption and kickbacks as well as involvements and harassments of FBR Officials”, he added.
There is need to revamp Federal Board or Revenue (FBR) through HR Cutting & Digitalization, while the government is now being extended powers to sneak into exporters premises through Audits, Chela Ram said.
During the press conference exporters said that this is a distracted policy and would discourage exporters and investors and such measure will be failed and would not add revenue to national exchequer. “We are making losses still will have to pay 1 percent on turnover and then go into NTR to explain to tax authorities regarding their profit & loss.
The income tax is on Income, why a company should pay tax if it has incurred losses, why 1 percent” they added. This issue must be addressed and resolved as increasing electricity tariff and costly financing making export sector’s inputs high and unbearable. In addition, EFS is not available to Rice exporters.
Export sector has strongly demand and insist on 1 percent FTR regime, as this is usually equivalent to 30-35 percent tax on profits which is in line with Industry, so there is no need for extra burden please. They said that the federal government has taken this decision without consultation of the export sector.
Chela Ram said that all exporting industry is in favor of FTR to provide a ease of doing business environment in the country. He warns that due to new policy, exporters will have to face huge loss and exports will be collapsed and haled. “We have no other option except to stop exports and shut down our factories”, he said. In this case, rice farmers will have to bear huge losses.
Whereas, government is already under pressure due to recent wheat, cotton, sugar issues. In this case rice farmers will see huge losses if rice export hurts, Chairman REAP said.
On the occasion Rafique Suleman ex-Chairman REAP, Abdul Rahim Janoo Ex-Chairman REAP, Muzammil Chappal Member MC REAP and others were also present.
Copyright Business Recorder, 2024
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