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Pakistan: Textile sectors reject move to discontinue zero-rated status

The value-added textile manufacturers and exports association in Pakistan has advised the government t to improve the zero-rated scheme, in consultation with stakeholders. They have advised the government to focus on energy growth instead first collecting taxes and then releasing them in refunds. Besides, the government should also step up a solid plan to increase taxpayers' base to help the country overcome its monetary deficits.

The association rejected the government's decision to discontinue the zero-rated status of five export-oriented sectors, warning that the move will unleash flight of capital, destruction on manufacturing and huge unemployment in the country. It feared the already subdued exports sectors will further nosedive into financial troubles as a result the nation will suffer huge foreign exchange loss and unemployment.

The association also warned that the discontinuation of the zero-rated status of the exports sectors lead to a corruption in connivance with "dubious" FBR officials under the mode of flying invoices, over invoicing, frauds in refunds and such other tactics. The government's attempt to collect interest free money in shape of sales tax will put the country's export at stake. It cautioned that the discontinuation of the zero-rating scheme will result in a 30 percent decline in exports in the first year.

 
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