FPCCI seeks reduced income tax rate to 0.25 percent

KARACHI: Pakistan’s apex trade body on Tuesday proposed extension in existing Textile Policy for the next five years with the reduction of income tax to 0.25 percent on export of textile products.


The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) informed the Textile Ministry that in Bangladesh the rate of income tax on export is 0.25 percent, while in Pakistan it is one percent, which immediately required to be matched with Bangladesh.


It is also proposed that 0.25 percent export development surcharge deducted from export proceeds is burden on exports and must be abolished. The government should find alternative of the collection but not from exporters.


The main thrust of giving proposals for the textile policy is to improve the value-added textile exports and survival of existing exporters, besides achieving the benefits of GSP Plus.


The apex trade body has sought refund of DLTL / drawback of local taxes and duties and exporters other dues up to September 30.


It said that DLTL / drawback of local taxes and duties – claims already submitted and pending with the State Bank of Pakistan since 2011.


The FPCCI said that despite the strong contribution of textile industry in exports of Pakistan during the last several years, Pakistan’s total share in the global textile trade is less than one percent. India, China, Bangladesh, Vietnam and Thailand are big competitors of Pakistan, producing low-cost products due to huge support of their government in term of tax credit and utility charges.


The FPCCI said that the government in the first-ever Textile Policy (2009-14) had set an ambitious target of $25 billion with incentives, including the continuation of export refinance at lower rates, relief on existing long-term loans, restructuring and the reorganization of the textile sector, refund of past Research and Development (R&D) claims and magnetization of the preferential trade agreement.


The FPCCI said that recently, in the federal budget 2014/2015, the government had announced various incentives to textile sector like cutting mark-up rate for export refinance scheme from existing 9.4 percent to 7.5 percent and long term financing facility for upgradation of technology at the rate of 9 percent for 3-10 years, vocational training programme for textile workers, drawback of local taxes and levies to exporters of textile products etc.


The apex trade body said that though the finance ministry reduced the Gas Infrastructure Development Cess (GIDC) from Rs300 to Rs150 but even the reduced rate is not viable and sustainable. The government should revisit the decision and keep it on previous rates because the harsh step would only benefit competitors in the international markets.


The FPCCI said that the acute shortage of electricity and gas in the country is also a major constraint for the value-added textile sector. The high cost of furnace oil in the international market is affecting the local power producers that imports huge amount of oil. Electricity generation from furnace oil has significant portion in the national grid. Long hours load shedding couple with distribution losses interruption the continuous supply of electricity.


In order to take advantage of GSP, the apex body stressed upon updating the labour laws. The FPCCI informed that the USA and the EU had warned Bangladesh that if would not update its labour laws dating back to 1934, then the GSP scheme may be revoked. “Pakistan must learn lesson from Bangladesh because our labour laws are also outdated,” it added.

Source: The NEWS