Global Rice News

Chela Ram Kewlani, the Chairman of the Rice Exporters Association of Pakistan (REAP), has expressed his opposition to the proposed changes in the National Budget regarding the export trade. He believes that converting the current Final Tax Regime (FTR) to a Hybrid model would be detrimental to the country’s export business.

Under the current FTR regime, exporters pay a 1% turnover tax, which is equivalent to a 30-35% tax on their profits. However, the proposed changes suggest transitioning to the Normal Tax Regime (NTR) with an additional 10% Super Tax, along with a minimum 1% payment. This would result in a 39% tax on exporters’ profits.

Kewlani argues that this policy would discourage exporters and investors. Exporters who are already facing losses would still have to pay 1% on their turnover and then explain their profit and loss to the tax authorities under the NTR.

He questions why a company should pay tax on income if it has incurred losses and why the tax rate is set at 1%. Kewlani emphasizes that this issue needs to be addressed, especially considering the high costs of electricity and finance, which increase the input costs for exporters.

Kewlani and other industry representatives strongly demand the continuation of the 1% FTR regime, as this tax rate is already in line with industry standards and does not impose an extra burden on exporters. They criticize the government for not involving them in the decision-making process, which they believe is unfavorable to the export trade.

The Chairman warns that the new policy would lead to significant losses for exporters and result in the collapse of the export market. In such a scenario, he states that exporters would have no choice but to halt their operations and shut down factories. This would result in huge losses for rice farmers and put additional pressure on the government, which is already dealing with issues related to wheat, cotton, and sugar.

The statement was made by Chela Ram Kewlani, along with Abdul Rahim Janoo, Ex-Chairman REAP, and representatives from various export-oriented associations at a press conference held at the Karachi Press Club. The conference was attended by industry leaders and representatives from associations such as the Pakistan Pharmaceutical Manufacturer Association, Pakistan Leather Garments Manufacturers and Exporters Association, Pakistan Sports Goods Manufacturers & Exporters Association, Pakistan Knitwear & Sweater Exporters Association, All Pakistan Fruit & Vegetable Exporters Association, All Pakistan Textile Mills Association, and Pakistan Tanners Association.

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