Pakistan Textile Exporters Expressed Disappointment on Withdrawal of Zero-Rating Pakistan

Textile exporters from Pakistan have expressed disappointment on the withdrawal of zero-rating regime for the export-oriented sector stating that the withdrawal is adversely affecting exports at a time when huge amounts of Sales Tax Refunds were already trapped with the Federal Board of Revenue (FBR) and exporters were facing liquidity crunch.

In a letter to Federal Secretary of Textile Industry Rukhsana Shah, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) senior vice chairman Jawwad Ahmed Chaudhary requested the Government to look at the export policies of India, China and Bangladesh, where the exporters are facilitated through export-friendly policies, reports the Nation.

The FBR should develop an export-friendly policy for the textile exporters of the country, instead of creating obstacles for them, he added.

The PRGMEA official expressed that due to energy shortfall, major chunk of finance has been diverted to develop energy infrastructure that squeezed financial streams breading cash flow jerks, which has been even more intensified because of delaying refund of sales tax.

Pakistan’s apparel export volume can be escalated from the existing US$ 8 billion if the Government takes all stakeholders on board and finalizes export policies with their consultations, he added.

On behalf of the textile industry, the PRGMEA official appealed to the authorities to include representatives of export-oriented industries for evolving an effective and result-oriented trade and export policy that could help achieve desired goal of increasing exports.

Zero-rating is a term relating to value added tax (VAT), and it refers to goods which are taxable but at zero rate. The significance of this rating is that businesses selling such goods may claim back their input tax, i.e., the VAT they have paid to their suppliers.

Earlier this week, in a meeting with the Federal Secretary of Textile Industry at the Pakistan Hosiery Manufacturers and Exports Association (PHMA) house, industry leaders urged Ms. Rukhsana Shah to bring in necessary reforms and give special status to export-oriented industry, in order to benefit from the Generalized System of Preferences Plus (GSP+) status granted by the European Union (EU).