LAHORE - The five export oriented sectors of textile, leather, carpets, sports goods and surgical instruments Monday demanded restoration of zero-rating regime for the exporters, saying new taxation in the upcoming budget would not be acceptable to the industry.

All Pakistan Textile Mills Association, Pakistan Readymade Garments Manufacturers and Exporters Association, Gloves Manufacturers & Exporters Association, Sports Goods Manufacturers & Exporters Association, Surgical instrument Manufacturers & Exporters Association and Carpet Manufacturers & Exporters Association, Pakistan Hosiery Manufacturers & Exporters Association have demanded the adoption of proposals for a zero rating regime for all exporters particularly the entire textile value chain.

All Pakistan Textile Mills Association Chairman Tariq Saud said the industry was no more cost effective due to the tax burden. The textile industry exports would remain sluggish unless the end product becomes cost effective. “The government can tax the products meant for domestic consumption but the exports of value added textile industry should be zero rated both for registered and unregistered buyers for the entire textile value chain,” he said.

He also led a delegation of the Association, which called on the ministries concerned in Islamabad ahead of the announcement of budget for the fiscal year 2016-17. The delegation called on the Minister for Petroleum and Natural Resources, Secretary Commerce and Secretary Finance. APTMA chairman also demanded introduction of 5 percent DLTL for the entire sub sectors of textile value chain to mitigate the incidentals of local taxes, levies and cess.

PRGMEA chief coordinator Ijaz Khokhar said that from experiences of the past especially during the period from 1996 to 2005, the FBR realized that to collect sales tax from exporters and then to refund was futile exercise. Ultimately the federal government identified five export sectors and prescribed list of items/materials used in these sectors which were changed to sales tax at zero percent. This measure provided and relief to the genuine exporters. Due to the measure, unscrupulous people in business community and the tax department were never happy as it closed the doors of corruption.

Ijaz Khokhar said that unfortunately, the exporters have again been dragged into the vicious circle of payments of sales tax and then claiming refunds once again. Initially, the tax rate was fixed @2% and 3% through SRO 1125 for exporters but now facilitation under SRO 1125 has been partially withdrawn and tax rate 3%, 5% and 17% have been introduced. It is emphasized that original status of SRO 1125 should be restored and maximum facilitation should be provided to five export sectors.

The five export sectors representatives including PRGMEA NZ Senior Vice Chairman Sohail Afzal Sheikh, Zulfiqar Hayat, Zia Ur Rehman Ch, Ashraf Raza, Irfan Ilahi and Malik Sadaqat in a joint press conference said that on 11th September, 2015, Prime Minister also committed to announce an incentive package for exporters in the meeting with exporters in Islamabad and publically announced the zero rated regime to the five export sectors but although eight months have been passed, no implementation has been made as yet.

Chairmen of five export oriented sectors’ associations said that large amount of sales tax and customs rebate refunds of exporters has piled up and processing of sales tax is critically slow. Due to delay in payment of refunds, exporters are facing shortage of working capital, which is creating problems for their export business.