The All Pakistan Textile Mills Association (APTMA) has urged the government to end its ‘regressive taxation policies’ on the textile sector, which the association claimed was leading to permanent closure of factories and massive unemployment.
In a statement on Friday, the association, representing the country’s textile sector, expressed ‘grave concern’ over the impact of SRO350(1)/2024 and recent withdrawal of the sales tax exemption on local supplies for export manufacturing on the textile sector.
“These regressive moves are crippling the industry with devastating consequences for employment, external sector stability and the overall economy,” it said.
APTMA highlighted that despite repeated pleas from industrial stakeholders and commitments from the high-ups, the Federal Board of Revenue (FBR) continues to enforce the “dysfunctional policy to the detriment of all manufacturers in Pakistan.”
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“The operational challenges posed by SRO350 have exacerbated the difficulties already faced by the industry,” it said.
In its statement, APTMA said that due to the requirement of linking the entire supply chain to file sales tax returns, several of its members and other firms across the country are unable to file their returns within stipulated deadlines since their upstream suppliers have not filed their returns and the FBR has also eliminated the option of delinking of invoices from the return.
“APTMA urges the government to honour its commitments and immediately amend SRO350(1)/2024 with input from industrial stakeholders who are most impacted by it. The textile sector cannot sustain further delays in rectifying this situation, which has already caused irreparable damage,” it said.
Moreover, the association also called for a withdrawal of sales tax exemption on local supplies for export manufacturing.
APTMA was of the view that the withdrawal of zero-rating on local supplies for export manufacturing under the Finance Act 2024 is not a revenue-driven measure but rather a response to the FBR’s audits, which identified misuse by a small number of firms among the approximately 1,900 beneficiaries.
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“APTMA urgently calls on the government to restore the zero-rating on local supplies for export manufacturing under the Export Facilitation Scheme (EFS).
“We urge the authorities to implement stronger checks and balances to prevent misuse, rather than resorting to collective punishment that further accelerates the deindustrialization trend that has devastated Pakistan’s economy over the past two years.
“The survival of Pakistan’s textile industry, the livelihoods of millions, and the future of our nation’s economic stability hinge on the swift reversal of these utterly regressive measures,” it concluded.
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