Economics & Business

APTMA budget proposals seek vital intervention in tax regime

KARACHI: All Pakistan Textile Mills Association (APTMA) budget proposals have sought vital intervention of the government in tax regime to ensure revival of industry.The revenue-neutral and revival-focused budget proposals, prepared by the APTMA, stress upon a stable environment with more market access to deal with competitiveness issues amid global economic meltdown.

The budget proposals further urge the government to revive industry in order to generate exportable surplus and create employment through much-needed changes in existing tax regime.

The textile spinning and weaving industry is facing unprecedented crises since July 2006. Consequently, sizeable textile capacity has been severely impaired. Textile exports in quantity and value terms have declined all across the value chain by 30 – 40% comparing with the maximum export year in 2006-07.

One major factor behind the declining trend is the erosion of Pakistan textile industry’s competitiveness particularly against the huge facilities being provided by the competing countries like China, India and Bangladesh etc. to the industry and exports.

APTMA has therefore sought favorable actions from the government on existing tax structure particularly that of Income tax, Customs duty and Sales tax.

On the Income tax side, APTMA has urged the Federal Board of Revenue that all textile machinery, raw materials, spares and chemicals should be exempted from the 1% withholding tax at import stage. Similarly, the levy of minimum tax was abolished in Federal Budget 2008-09 and ATPMA has sought continuation of the status in the Federal budget 2009-10 as well. APTMA has further urged the government to reduce maximum corporate tax to 25% in the upcoming budget to attract foreign investment in the sector.

In the context of prevailing shortage of Polyester Staple Fibre (PSF) and not being comparatively cost effective viz international competitors, APTMA has proposed that the customs duty of 4.5% on Polyester Staple Fibre on the import stage should be reduced for local consumers. Furthermore, duty levied on other Man Made Fibres like Viscose, Acrylic Fibres etc. should also be withdrawn in next budget. Similarly, the DTRE policy for imported PSF to export manufactured goods should be continued and it is further proposed that a provision should immediately be made a s temporary contingency measure for import of 10,000 tones PSF per months free from import and anti dumping duties.

APTMA has proposed that zero rating of sales tax for textiles should be continued as over 85% cotton and MMF consumed in the textile value chain are exported in one form or the other.

Regarding pending sales tax refunds, APTMA has proposed an immediate sanction of outstanding sales tax refunds to the extent of 1% of the turnover value be introduced to liquidate pending refunds. The Collectorates may conduct post sanction verification of sales & purchase invoices. APTMA has also urged the government to withdraw 10% duty on import and local sale of Viscose besides abolition of 1% Special Excise Duty on machinery, spares and packaging materials.

So far as duty drawback to zero rate multiplier effects of the incidence of taxes, levies is concerned, APTMA has urged the government to allow duty drawback on yarn @ 3 – 5% and Greige Fabric @ 4.5% of the turn over value and to the downstream sector on cascading basis.

The APTMA spokesman said an early removal of supply side constraints and financial support to the industry would enable it to attract much-needed investment in the country and to provide jobs to the masses at large. NNI

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Haroon Akram Gill

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