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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
Express Tribune
12-04-2025
- Business
- Express Tribune
Govt plans firewall against agency harassment
Listen to article Special Assistant to the Prime Minister (SAPM) for Industries & Production Haroon Akhtar Khan has emphasised the government's commitment to protecting the corporate sector from undue harassment by investigative agencies such as the National Accountability Bureau (NAB), Federal Investigation Agency (FIA), and Federal Board of Revenue (FBR). He proposed a "firewall" mechanism requiring any investigation into corporate entities to first be vetted by relevant bodies such as the Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP), Federation of Pakistan Chambers of Commerce & Industry (FPCCI), or Karachi Chamber of Commerce & Industry (KCCI). "We want to prevent arbitrary action against legitimate businesses. This firewall is not meant to protect wrongdoers but to ensure that honest entrepreneurs are not subjected to harassment," he stated during his visit to KCCI on Saturday. Chairman Businessmen Group Zubair Motiwala, Vice Chairmen Anjum Nisar and Mian Abrar Ahmed, KCCI President Jawed Bilwani, other office bearers, and industrialists attended the meeting. Akhtar called for a robust industrial policy to drive export-led growth, reduce import dependence, and build foreign exchange reserves. He stressed prioritising domestic investors and acknowledged KCCI's concerns, reiterating the prime minister's vision of transforming Pakistan into the next Asian Tiger through industrialisation. He blamed past policy failures for the closure of major industries but cited recent improvements, including a 10% policy rate cut and lower electricity tariffs. He also announced a forthcoming bankruptcy law and committees for the revival of sick units. An internationally reputed consultant has been hired to develop Pakistan's first comprehensive industrial policy. SMEDA will also be restructured and the Ministry of Industries will be transformed into a central hub for industrial affairs. To improve financing access, Akhtar said a committee would ensure credit availability for SMEs and agriculture. He also criticised the current system requiring up to 350 certifications to start a business, calling it an obstacle to the ease of doing business. A high-powered committee will address capital flight by investigating why citizens prefer to park wealth abroad and suggest ways to encourage local investments. He acknowledged IMF-related tax constraints but emphasised that power tariff savings could be used to lower taxes and enhance competitiveness. On US tariffs, he said Pakistan is ready for dialogue and may send a delegation to Washington for trade negotiations. Motiwala criticised high revenue targets, stagnant industrial activity, and harsh tax measures that he said are crippling existing industries. He warned against shifting exporters to the Normal Tax Regime and condemned the seizure of bank accounts without due process. He urged Pakistan to adopt investor-friendly policies like those in the Gulf and hire global experts to compare regional cost competitiveness. KCCI president warned that excessive taxation and poor business conditions are driving businesses abroad, causing capital flight and economic instability. He stressed the urgent need for reforms and a stable policy framework to stop this exodus and restore investor confidence.
