LAHORE - The textile industry has urged the government to continue the sales tax zero-rating facility to five export-oriented sectors in the upcoming federal budget 2017-18, besides speeding up the disbursement of drawbacks under the PM export package.

The major textile bodies including All Pakistan Textile Mills Association and Pakistan Hosiery Manufacturers Association have said that any move to withdraw zero rating regime for the five exporting sectors would tantamount to devastating impact on the growth of textile industry in Pakistan.

PHMA Chairman Adil Butt criticised the Federal Board of Revenue’s (FBR) proposal to withdraw zero-rated tax regime granted last year after a long debate and hectic efforts of the exporting industry. “FBR wants to end the facility just to make its balance sheet correct. The balance sheet might show enhanced revenue collection but the industry would be collapsed if the ‘no tax no refund’ system is withdrawn, which is already not being implemented properly,” he lamented.

APTMA Chairman Aamir Fayyaz has also urged the government to continue with zero-rating regime in next budget to revive industrial viability and encourage investment. He said Finance Minister Ishaq Dar had introduced this regime after threadbare discussion – especially, to help the five export-oriented sectors that had become uncompetitive in the region due to escalating cost of doing business. It was further analysed that it was beyond the exporter’s means to acquire taxable inputs and keep waiting for refund. In fact, it was agreed that the government would finally move to no tax-no refund arrangement for exporters. Fayyaz further said that such regime worked successfully when it was originally introduced in 2005 and went a long way in boosting exports in those years.

The PHMA chairman said the National Assembly Standing Committee on Textile Industry had also supported the value-added textile sector’s demand for declaring all five export-oriented sectors as zero-rated. He observed that zero-rating of tax had reduced the work load of the Federal Board of Revenue, sparing the export sector from wasting time in getting refunds.

This regime was allowed after proper diligence and comprehensive research.

Adil urged the government that instead of ending zero-rated regime it should implement this system in true spirit in budget 2017-18 as billions of rupees of exporters are still stuck up in refund regime. He said that zero-rating facility was reinstated in order to save the exporters from liquidity crunch; however, the FBR wanted to sabotage the government's efforts of enhancing export. It has rolled back all sales tax refund payment orders (RPO) considering unnecessary objections, adding the miseries of exporters.