Monday, March 28, 2011

Zero-rated status for all exports maintained: Hafeez

KARACHI: The government, following hue and cry from the industrial and trading sectors, has decided to maintain zero-rated status for all the five sectors � textile, leather, surgical, sport goods and carpet.

Federal Finance Minister Dr Hafeez Shaikh during a meeting with the business community assured them that this policy would be maintained for at least three years.

It was further decided to have two rates for tax, like, 6.0 percent on selling of yarn and 4.0 percent on any type of value-addition, which would be charged only from unregistered persons on the basis of value of their supply.

Issues pertaining to withholding tax were also resolved by reducing it from 3.5 percent to 1.0 percent on goods and services while federal excise duty will remain zero.

The 17 percent sales tax has been reduced to 4.0 percent on buying of finished and semi-finished products.

With regards to parameters for audit a committee would be formed, for which SRO 509 (I)/ 2007 has been restored.

The finance minister promised to solve all the problems up to the satisfaction of the textile sector.

Hafeez said the International Monetary Fund�s (IMF) conditions had made it imperative to impose taxes across-the-board on all sectors of the economy.

The businessmen expressed their contentions regarding problems due Afghan Transit Trade and multiplicity of taxes, which had seriously affected the backbone of the economy, especially the textile sector.

Dr Hafeez agreed that tax mechanism should be in such a way that the local textile products remain competitive against the smuggled goods under ATT.

He expressed his concern on the inflationary impact of taxes on the poor masses.

He appreciated the uniqueness of the textile sector, which was responsible for 60 percent of exports and 42 percent of the urban employment.

The finance minister understood the problems being faced by the textile sector due to the ATT and that any mode of front loading in form of sales tax on textile sector should result in lowering the costs of smuggled goods making them more viable.

The stakeholders were satisfied at the win-win situation as well as the textile sector expressed their profound gratitude to the finance minister and the government.

Federal Board of Revenue (FBR) Chairman Salman Siddique, former FBR chairman Abdullah Yousuf, FBR Revenue Division Additional Secretary Asrar Raouf and members of the revenue council were present.

Pakistan Apparel Forum Chairman Jawed Bilwani, former KCCI vice president Haroon Agar, Pakistan Chemicals and Dyes Merchants Association Chairman Maqsood Butt, APTMA Chairman Usman from Pakistan Yarn Merchant Association and Bashir Ali Muhammad from Gul Ahmed Textiles along with other stakeholders from all over Pakistan attended the meeting.