Pakistan Will Cancel The Zero Tax Rate For Textile And Other Export Industries.

According to the Pakistan forum express June 12th, despite the strong protests from Pakistan's 5 main export departments, the Pakistan Justice Movement Party government has lifted zero tax incentives for these industries in the new fiscal year budget, saying it would streamline capital flows and prevent capital outflows.

On Tuesday, the Pakistan government announced the 2019/20 fiscal year budget, which revoked the 1125 provision of the 2011 statutory regulatory order (SRO), which stipulates no sales tax on inputs and products of 5 export-oriented industries such as textiles, leather, carpets, sporting goods and surgical instruments.

Hamad, Minister of state of the Ministry of finance of Pakistan, said the aim was to solve the problem of delayed repayment.

There are loopholes in the zero sales tax policy, and some non target beneficiaries and non exporters take advantage of this preferential policy.

Tax relief for manufactured goods also hurts financial revenue.

He also said that in order to simplify the tax process and prevent tax evasion, the budget proposed measures to abolish the SRO1125 clause and restore the 5 zero tax industry sales tax to 17% standard level.

He added that retailers who choose to pay taxes in real time will get a concession and will be charged a 15% tax.

Jawad, chairman of the Pakistan knitwear manufacturers Exporters Association (PHMA), commented that the decision violated the textile policy of the PTI government before the election, and said that the exporters refused to accept the decision of the government to withdraw the SRO1125 clause.

He predicted that the cancellation of preferential policies for the 5 export industries would reduce exports by 30% and strike the export industry, leading to capital flight, large-scale unemployment and huge foreign exchange losses, which would also lead to the closure of small and medium-sized export enterprises.