KARACHI: Exporters on Wednesday proposed the government to slash the withholding tax by 50 percent to enhance earnings.
In its budget proposals announced at a press conference, the Pakistan Hosiery Manufacturers Association (PHMA) said, at present, the withholding tax on exports is one percent, which is considered as the final liability. The government should reduce it to 0.5 percent in the upcoming Federal Budget 2021/22, as it would help in enhancing the country’s exports.
Exporters also demanded immediate release of the outstanding tax refunds to provide sufficient liquidity to the industry for the purchase of raw materials and production of end products.
The exporters suggested the government avoid revenue collection under the head of the Export Development Fund (EDF), as the same was already an additional burden on the exporters.
They urged the government to release funds that were stuck under the Drawback of Local Taxes and Levies (DLTL). Besides, the uniform tariffs for electricity and gas should also be notified for all industries across the country.
Muhammad Jawed Bilwani, central chairman of PHMA, said that the country has posted a growth of 14 percent in exports during the current fiscal year. This growth would be around 25 percent if the exporters were given outstanding tax refunds, he added.
Bhiwani, however, praised the present government for releasing the significant amount under the sales tax refund system launched by the Federal Board of Revenue (FBR) last year.
The association had submitted tax proposals with the aim of increasing the revenue collection and broadening the tax base, he added.
The textile industry is the largest sector, fetching foreign exchange of over $15 billion annually, he said, adding that exports of this sector can be enhanced by reducing the rates of duty and taxes.
Zubair Motiwala, chairman of the Businessmen Group (BMG), said that the government was borrowing through international bonds at higher rates, which was only increasing the debt burden.
He urged the government to incentivize the industry for increasing manufacturing and exports.