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Government Proposal to Shift Export Trade Taxation Criticized by Rice Exporters Association

The Rice Exporters Association of Pakistan (REAP) has expressed criticism towards the government’s budget proposal of converting export trade taxation from the Final Tax Regime (FTR) to a hybrid model of the National Tax Regime (NTR) and Minimum Tax Regime (MTR). According to REAP’s chief, Chela Ram Kewlani, this proposed combination would have disastrous consequences for the export business.

In a press conference held at the Karachi Press Club (KPC) on Saturday, Kewlani stated that while the government is seeking foreign exchange assistance from international institutions, it is simultaneously pushing the export sector towards closure.

The government’s proposal suggests a shift from the current one percent turnover-based FTR to a standard taxation rate of 29 percent on taxable profit. Additionally, it includes NTR with a 10 percent Super Tax, with a minimum payment of one percent.

According to Kewlani, this 39 percent tax on exporters’ profits would have a disastrous impact on the export trade industry. He further expressed regret over the decision to empower the Federal Board of Revenue (FBR) with auditing the books of accounts of exporters and assessing their profits and losses. Kewlani believes that this move could potentially lead to increased corruption and harassment.

Impact on Rice Export Industry

The proposed tax regime shift has raised concerns among rice exporters in Pakistan. The REAP chief highlighted that the increased taxation burden could potentially harm the profitability and competitiveness of the rice export business. The additional financial strain imposed by the new tax structure may discourage export activities and hinder the overall growth of the industry.

Pakistan is known for its rice production and export, with a significant contribution to the global rice market. Rice exporters play a crucial role in promoting the country’s agricultural sector and generating foreign exchange earnings.

Call for Reconsideration

REAP, along with other stakeholders in the rice export industry, urges the government to reconsider the proposed tax regime and explore alternatives that would not hinder the growth and competitiveness of the sector. The association highlights the importance of creating an enabling environment for exporters to thrive and contribute to the country’s economy.

It remains to be seen how the government will address the concerns raised by the REAP and whether any modifications or amendments will be made to the proposed tax regime.