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Business Recorder
a day ago
- Business
- Business Recorder
Textile bodies demand continuation of original EFS
KARACHI: The Value-Added Textile Associations Forum, representing various apparel and textile bodies, jointly held a press conference on Wednesday, demanding the continuation of the Export Facilitation Scheme (EFS) in its original form as introduced in 2021, without any amendments made in the Federal Budget 2024-2025. The presser held at PHMA House with leaders of different textile associations strongly opposing the imposition of Sales Tax at the import stage under the scheme, warning it would undermine the purpose of facilitating exporters. The forum called on the Government of Pakistan to continue the scheme under section 880(1)(b) of SRO 957(I)/2021, which allows local input goods liable to sales tax to be supplied against zero-rated invoices. This provision, they said, ensures liquidity, competitiveness, and formalization across the export-oriented industry value chain. 'EFS is inevitable and a lifeline for enhancing national exports,' the associations declared in a unified voice. They urged the reinstatement of local procurement under the scheme to support the entire textile value chain, enabling a level playing field and a win-win for all stakeholders. Export Facilitation Scheme be retained in FY26 budget They explained that the scheme was launched in 2021 after wide consultation with stakeholders to simplify and streamline export procedures. EFS merged all previous schemes into one, reduced documentation requirements, and introduced a single-window digital system through WeBOC and Pakistan Single Window (PSW). The fully automated system includes real-time audits and helps regulate compliance costs. According to the forum, since its inception, the EFS has played a crucial role in easing liquidity pressures and supporting exporters' competitiveness. The press conference was addressed by leaders including Jawed Bilwani (Chief Coordinator, Value-Added Apparel & Textile Associations Forum), Muhammad Babar Khan (Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association), Ijaz Khokhar (Former Chairman, Pakistan Readymade Garments Manufacturers & Exporters Association), Rafiq Godil (Former Chairman, Pakistan Knitwear & Sweater Exporters Association), Farooq Rahman Dittu (Pakistan Cotton Fashion Apparel Exporters Association), Ather Bari (Chairman, Towel Manufacturers Association), Irfan Merchant (Chairman, Denim Manufacturers & Exporters Association), Khurram Mukhtar (Former Chairman, Pakistan Textile Exporters Association), Hamid Arshad Zahur (Chairman, Pakistan Tanners Association), and other representatives from major exporting cities including Karachi, Lahore, Faisalabad, and Sialkot. Jawed Bilwani stressed that EFS has been critical in supporting not only textiles but other export sectors as well. He pointed out that all associations, including APTMA, initially welcomed EFS. In an Inter-Ministerial Committee chaired by Planning Minister Ahsan Iqbal, APTMA representatives agreed that the scheme should continue in its original form. However, APTMA later parted ways and demanded the imposition of Sales Tax at the import stage under EFS—a move that Value-Added Associations rejected strongly. He warned that imposing Sales Tax at the import stage would defeat the very objective of EFS, causing severe liquidity issues and harming exporters' competitiveness. Bilwani also revealed that APTMA, in the same committee meeting, admitted their yarn quality—produced from contaminated local cotton—is not on par with imported yarn. He stated that even the top 100 textile exporters, including composite units under APTMA, support the continuation of EFS in its original form with local procurement allowed on zero-rated invoices. He added that the upcoming federal budget should also include the reinstatement of Regionally Competitive Energy Tariffs and Final Tax Regime (FTR) to ensure financial viability and export growth. Speaking at the press conference, PHMA Central Chairman Muhammad Babar Khan rejected APTMA's 'misleading' demand to impose Sales Tax at the import stage under EFS. He said that spinning is only a sub-sector of the textile industry, while the value-added sector remains committed to supporting the entire value chain. He urged the Government to create policies that benefit all textile sub-sectors equally, from garments to spinning and ginning. Babar Khan highlighted that rising manufacturing costs have hurt all textile sectors. The apparel and garment sector contributes the highest value addition, up to 70 percent, and needs EFS to remain unchanged to stay competitive. He questioned why APTMA, after supporting EFS from 2021 to February 2025, has suddenly changed its stance. He urged APTMA to drop their unjustified demand for Sales Tax at import-stage and return to supporting the reinstatement of local procurement in the scheme. Babar Khan recalled the key strengths of EFS: a strategic and fully automated system built with input from all textile associations to reduce compliance burdens and simplify export operations. The scheme offers end-to-end traceability and operates in a fully digital environment through WeBOC and PSW. The association leaders agreed that countries like Bangladesh and Vietnam also rely heavily on imported raw materials to manufacture export garments. Their governments offer facilitation schemes similar to EFS, making it crucial for Pakistan to maintain parity. They stated that collecting Sales Tax from exports only to refund it later serves no real purpose and often leads to long refund delays, further straining exporters' liquidity. They emphasized that EFS should remain unchanged and that the FBR should focus on expanding the tax base instead of burdening existing exporters. Exporters' Sales Tax refunds have already been delayed for months, and adding more taxes will only increase their hardships. The associations repeated their firm demand to continue EFS in its original form as of 2021—before the 2024-2025 Federal Budget—with local procurement allowed under section 880(1)(b) of SRO 957(I)/2021, which permits local input goods subject to Sales Tax to be supplied against zero-rated invoices. This, they said, is necessary to ensure liquidity, competitiveness, and formalization of the export value chain. The continuation of EFS in its original form has also been recommended by the Inter-Ministerial Committee chaired by the Federal Planning Minister, under the Prime Minister's direction. Other PHMA representatives present at the event included Former Chairmen Chaudhry Salamat Ali, Farrukh Iqbal, Kashif Zia, Sr. Vice Chairman Hazir Khan (Faisalabad), Former Chairman Shahzad Azam Khan and Zonal Chairman Abdul Hameed (Lahore), Tariq Bhatti and Khawaja Musharraf (Sialkot), PRGMEA Northern Zone Representatives Sohail Afzal and Ayazuddin, and numerous top exporters from Karachi, Lahore, Faisalabad, and Sialkot. Copyright Business Recorder, 2025
Business Recorder
24-05-2025
- Business
- Business Recorder
Fair share of taxes: PHMA objects to FBR's claim
KARACHI: The Pakistan Hosiery Manufacturers & Exporters Association (PHMA) Chairman Muhammad Babar Khan has strongly objected to what he calls a misleading impression by the Federal Board of Revenue (FBR) that exporters do not pay their fair share of taxes. This claim, reportedly shared with the IMF and in parliamentary budget sessions, is 'untrue and damaging,' he said. 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
