Exporters express strong opposition to proposed hybrid tax model
Published on: June 16, 2024.
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Exporters in Pakistan, including those involved in the rice, fruits, vegetables, and pharmaceutical industries, are objecting to the government’s proposed national tax regime. They argue that the proposed 1.0 percent tax on turnover would have a negative impact on their businesses by taking away 30 percent of their profits. Chela Ram Kewlani, the chairperson of the Rice Exporters Association of Pakistan (REAP), expressed these concerns at a recent press conference held at the Karachi Press Club.
Representatives from the All Pakistan Fruit & Vegetable Exporters Association (PFVA) and the Pakistan Pharmaceutical Manufacturer Association (PPMA) were also present at the press conference, along with former REAP chairs Abdul Rahim Janoo and Rafique Suleman. The chairperson of REAP voiced opposition to the recent budget announcement regarding the conversion of the export trade from the final tax regime (FTR) to a hybrid model called the national tax regime (NTR) coupled with the minimum tax regime (MTR). Instead, they demanded the continuation of the fixed tax regime.
According to Kewlani, the proposed NTR plus 10 percent super tax with a minimum 1.0 percent paid would result in a 39 percent tax on exporters’ profits. This would create disastrous consequences for the export trade industry, as it could lead to increased corruption and harassment by tax authorities. Kewlani emphasized that companies should not be required to pay taxes if they have incurred losses, as income tax should only apply to actual income.
The exporters at the press conference expressed disappointment that the government did not consult with them before making these decisions, which they believe are not in the best interest of the export trade. They warned that if the new policy is implemented, exporters will face significant losses, leading to the collapse of the export industry. They also noted that rice farmers would be particularly affected by these changes, as the losses would be passed down to the paddy purchase level.
It is crucial for the government to address the concerns raised by these exporters in order to protect the sustainability of the export industry and prevent further economic losses. Source
