LAHORE - Pakistan Tanners Association has asked the government to include raw hide and skin in the sixth schedule of Sales Tax Act, 1990 like Phutti (raw cotton) to fulfill the domestic needs of the leather sector, which is the second largest exporting sector of Pakistan.
Chairman PTA Saqib Saeed Masood said if this happens, leather products exporters might avail exemption from the sales tax and could play their vital role in propelling export. The leather industry earns the country the annual export revenue of $1.14 billion. It provides jobs to one million people and is the mother industry of leather garment, footwear, glove and other leather good, he said. Sheikh Masood said Pakistan produces one of the world’s finest quality leather products. He said if the government provides level-playing field, the leather industry can reach worth three billion dollars in the next three years. The tanners chief said the industry contributes billions of rupees towards national exchequer through customs duty, sales tax, income tax, withholding tax, EDS, tax on services, employees’ old age benefits, social security etc.
During the last six years, the leather exporters paid $15.81 million in EDS i.e. approximately $2.63 million per annum.
Masood said leather products, like shoes, garments, bags, etc. are already subject to sales tax. PTA former chairman Agha Saiddain said the local supply and import of hides/skins under SRO Nos 535(1)2005, 536(1) 2005, 621(1)2005, 525(1) 2006, 509(1)2007, 283(1)2011, 1012(1)2011, 1058(1)2011 and 1125(1)2011 has always remained exempted from duties and taxes.He said that the hides/skins are purchased from small butchers from all over the country and on Eid-e-Qurban from persons carrying 4/5 skins on bicycles. For this reason hides/skins were never made taxable even in our competing countries India, China, Vietnam, Cambodia, Malaysia, Indonesia, Taiwan etc. It would be unique example if hides/skins are made taxable even from unregistered persons, he added. Hides/skins are zero rated in India, China, Bangladesh, Turkey, Indonesia, Vietnam, Cambodia, Philippines and other competing countries. Levy of duties and taxes would have rendered leather industry of Pakistan non-competitive. To allow levelplaying field the authorities should adopt the same policy in the country.