Textile ministry for continuation of presumptive tax regime

The textile ministry has strongly opposed bringing presumptive tax into normal taxation regime, saying any such move will adversely affect Pakistan''s exports and make them uncompetitive in the international market.
The ministry said the government should facilitate the exporters by providing them a conducive environment for trade and business.
In its comments on the proposal, the ministry said that presumptive tax is a hassle-free levy wherein exporters are required to pay tax at fixed ratio without any contact with the taxmen.
The end to presumptive tax is also contradictory to the government''s policy of minimising the taxman-taxpayers contact. The basic question needed to be asked before taking any final decision on the proposal is how can exporters carry out their activities to get more share in the world market when they will spend much of their time in sorting out issues with the tax authorities. Its only outcome would be opening up of another outlet for corruption.
The government has fixed presumptive tax for exports and it varies between 0.75 percent to 1.50 percent of total value of the exports and taxmen are required to take it as final. Under presumptive tax the taxmen cannot question the value of the consignment or tax paid by any particular exporter on any consignment.
With the implementation of the proposal the exports and local sales would become at par and there will be no tax advantage for export sale and ultimately exports will be following downward trend.
In presumptive tax regime, exporters feel easy to pay final tax liability on export proceeds through the banks, as it is a transparent process of payment of taxes.
It also saves time of both parties-exporters and taxmen. In the presumptive tax regime, exporters are not required to file details/accounts to tax department. They only need tax deduction certificate issued by the bank.
It''s also considered simple and easy way to pay tax as no provision of audit by tax department is required by the exporters.
Under presumptive tax regime, exporters are not required to pay Workers Welfare Fund (WWF) at the rate of 3 percent on taxable income. The exporters take presumptive tax as a special advantage. It''s a global system due to its simplicity and hassle-free mechanism. It is applicable in a number of countries including USA, France, Colombia, Bolivia and Thailand. India and Bangladesh are also implementing the scheme and reaping its benefit.