Fair share of taxes: PHMA objects to FBR's claim
Babar Khan clarified that under the current Normal Tax Regime (NTR), apparel exporters are paying significantly higher taxes—over 45 percent—compared to the previous Final Tax Regime (FTR), where taxes ranged from 25 percent to 33.3 percent based on profit margins. He explained that under FTR, exporters paid a one percent fixed tax plus a 0.25 percent Export Development Surcharge (EDS), deducted automatically.
Now under NTR, exporters pay a one percent minimum tax and one percent advance tax, plus the 0.25 percent EDS—totaling 2.25 percent on export proceeds at the time of realization. Additional taxes are levied on profits annually, increasing the total tax burden.
He warned that the manual processing in NTR has increased opportunities for corruption, contrasting it with the automated deductions under FTR. Exporters also face super tax and minimum tax even in loss-making years, with refunds delayed for months—causing severe liquidity issues.
PHMA raised concerns over government plans to impose Sales Tax at the import stage under the Export Facilitation Scheme (EFS), saying this would worsen exporters' financial strain as sales tax refunds are already delayed.
The association urged the government to retain the original EFS provisions, including the zero-rated status for local purchases under SRO 957(I)/2021, to support competitiveness and ensure smoother operations across the textile value chain.
Babar Khan warned that current policies would hurt exports, widen the trade deficit, and reduce foreign exchange earnings. He called on the government to focus on bringing non-taxpayers into the tax net rather than penalizing compliant exporters.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 days ago
- Business Recorder
US tariff cuts open new doors for Pakistan's auto sector, says Kamal
With the recent US tariff reduction opening fresh opportunities for Pakistani auto exports, Minister of Commerce Jam Kamal Khan on Wednesday unveiled plans to strengthen the sector, forming a high-level committee to resolve industry challenges. The development came during an auto industry meeting with the commerce minister on Wednesday, read a statement. During the meeting, the minister informed that a high-level committee, including the Ministry of Commerce, Federal Board of Revenue (FBR) and the Ministry of Industries and Production, has been formed to resolve auto industry issues. Meanwhile, industrialists urged the government to protect the local auto sector from importing old vehicles. They said that production costs have increased due to new technology. Kamal informed that a government strategy will be prepared for the auto sector development and exports. 'After tractors and motorcycles, now cars will also be exported,' he said. The minister was of the view that the recently announced tariff reduction agreement with the US has created new opportunities for auto exports. The government believes that Pakistan's exporters are poised to gain a significant competitive edge in the US market after the government successfully negotiated a reduction in reciprocal tariffs from 29% to 19%. This marks the lowest tariff rate in the region and presents a major opportunity to boost Pakistan's exports to the United States. Meanwhile, Kamal invited the auto industry to join the new industrial policy. He noted that healthy competition is increasing in the Pakistani auto market. The commerce minister informed that tariffs on the auto sector would be reduced gradually in the next five years.
Business Recorder
2 days ago
- Business Recorder
REMIT Programme: Commitment reaffirmed to continue collaboration
ISLAMABAD: A meeting of the Steering Committee of the Foreign, Commonwealth and Development Office (FCDO)'s Revenue Mobilisation, Investment and Trade (REMIT) Programme was convened Tuesday at the Ministry of Finance under the chairmanship of Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, said a press release issued on Tuesday. The meeting was co-chaired by Jane Marriott, the British High Commissioner to Pakistan. The session brought together senior officials from the Ministry of Finance, Federal Board of Revenue (FBR), Ministry of Commerce, officials from stakeholder ministries and departments, as well as, representatives from the British High Commission and the FCDO. During the meeting, updates were shared on various initiatives under REMIT's support in multiple areas, including technical assistance to Pakistan for the implementation of IMF commitments, progress on GST harmonization, climate and disaster budget tagging in the provinces, regulatory reforms at the provincial level, trade liberalization, industrial policy, and effective communication of economic reforms. The Finance Minister appreciated the progress made on reform initiatives across the taxation, investment, trade, and macroeconomic portfolios. He particularly commended the work on Compliance Risk Management and the steps taken to improve the taxpayers' interface with the Federal Board of Revenue (FBR), as well as, the regulatory and tariff reforms that will help drive Pakistan's economic growth. He also highlighted the importance of a coordinated short-, medium-, and long-term approach to attracting investment to Pakistan as a direct outcome of the ongoing economic reform efforts. The Finance Minister stressed the vital importance of establishing an enabling and conducive regulatory environment to instil confidence among both local and international investors seeking to invest in Pakistan. He observed that investors primarily look for reduced taxation, lower energy costs, affordable financing, and supportive regulatory frameworks. While the government is making determined efforts to address challenges related to taxation, energy, and financing, he noted that creating a facilitative and business-friendly regulatory environment is comparatively easier, as it lies within our own control and can be achieved through commitment, diligence, and sincerity of purpose. Jane Marriott reaffirmed the UK Government's commitment to supporting Pakistan in achieving its economic reform objectives, emphasizing that the REMIT Programme remains a key platform for advancing fiscal, trade, and investment reforms in close collaboration with federal and provincial stakeholders. The meeting concluded with both sides reaffirming their commitment to continued collaboration under the REMIT Programme to strengthen Pakistan's economic foundations and to accelerate reforms that will lead to sustainable economic growth. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
PARTLY FACETIOUS: President Trump is a kind man, a man of peace?
'President Trump has placed portraits of those of his most recent predecessors with whom he had a contentious relationship to less prominent locations.' 'So that would mean pretty much all the recent former presidents - from Bush 1 and 2, Obama and…and where did he place Joe Biden's portrait?' 'It's not yet ready but I have it on good authority that it would be adorned on the wall of the guest bathroom used by those the neocons force him to deal with but he really doesn't like them - Ukrainian Zelensky and the European Union President Ursula von der Leyen.' 'Netanyahu?' 'Nah the guy uses the facilities before any meetings at the White House. So the portrait would face the toilet or…' 'President Trump is a kind man, a man of peace, so he has instructed that Biden's portrait be placed above the toilet so it will catch the eye as you enter but then…' 'You are being facetious.' 'The bathroom in use by himself would have the portrait of Andrew Jackson, President Trump's favourite former president.' 'You know I was just thinking we have no history of changing the placement of a single former president - elected, selected, self-appointed.' 'I don't think the incumbent occupant is going to change any placement — a long time ago he did consider changes that take place every three years as opposed to those with a life-long tenure…' 'Water under the bridge.' 'Right anyway you know you go to the Federal Board of Revenue and you have photographs of all the previous Chairmen on the wall, you go to any other government office and you see the same thing, my point is shouldn't at least the ones who were, how can I put it, forcefully evicted for wrongdoing – perceived or otherwise…' 'And that is precisely why no one touches the placement of the photographs in this country. One year perceived to be guilty, the next year convicted and the third year unperceived if you will.' 'Unperceived? Is that a word?' 'I am so proud of you – you fixated on the right word.' 'Sarcasm won't…' 'Let it be, that's all I have left.' Copyright Business Recorder, 2025
