KARACHI: Pakistan Fruit and Vegetable Exporters Association (PFVA) has warned that abolition of the fixed tax regime (FTR) will put negative impact on the economy and result in significant reduction in exports as well as foreign exchange earnings, besides closure of export units and further unemployment in the country.
The federal government has proposed to levy 29 percent tax on export earnings in the next financial year budget 2024-25 instead of full and final withholding tax of 1 percent under the fixed tax regime.
Addressing a press conference at Karachi Press Club (KPC) on Tuesday, Muhammad Shehzad Shaikh Chairman PFVA, Waheed Ahmed Patron-in-Chief PFVA and other leaders strongly rejected the proposal and warned the federal government that putting the export under the normal tax regime by abolishing the fixed tax regime will have a very serious impact on the economy of Pakistan.
The PFVA is of the view that the abolition of fixed tax regime and proposal of 29 percent tax on export profits in the budget 2024-25 is not in favour of Pakistan keeping the current disappointing economic conditions in view.
“The PFVA strongly condemns the exclusion of exports from the fixed tax regime and calls upon all the parliamentary parties of Pakistan to raise their voices against this cruel proposal at the level of the parliament and the government to reconsider the same and recommends maintaining a fixed tax system,” Waheed Ahmed said.
He said that abolition of fixed tax regime will significantly reduce exports; closure of export units will lead to widespread unemployment. He said government’s tax revenue targets will also not be met, shortage of foreign exchange will further depreciate rupee and above all, the agricultural sector, which is the backbone of Pakistan’s economy and job giver to millions of people will be at risk.
With the strenuous efforts of PFVA, the export of fruits and vegetables from Pakistan has reached $700 million, which is likely to reach $1 billion in next three years, he said.
Waheed said the biggest challenge for the agriculture and horticulture sector is the impact of climate change, leading to food shortages not only for export but also to meet local demand. Another major problem the horticulture sector is facing is rising costs. “We were strongly anticipating that the government would provide a big relief package for the agriculture sector in the budget, but it was disappointing as the agriculture sector was completely ignored in the budget,” he added.
Waheed Ahmed said that PFVA is fully focused on exploring new international markets for Pakistan, marketing, packaging and modernising processing and improving the quality of fruits and vegetables. In the case of the 29 percent tax imposed on export income, the focus of exporters and PFVA will be diverted from the main goal of enhancing the export of fruits and vegetables from Pakistan since they will spend more time in maintaining records of income, expenditure and profit, he mentioned.
“If the proposed 29 percent tax on exports is implemented, it will be difficult to maintain the current level of exports of fruits and vegetables,” Muhammad Shehzad Shaikh Chairman PFVA warned.
He said that the biggest problem in the implementation of the proposed 29 percent tax is the tax exemption on the agricultural sector and the large proportion of cash-based transactions. While, some 90 percent of farmers in Pakistan are small scale farmers who have tax exemption or zero rate facility, he added.
Copyright Business Recorder, 2024
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