Latest news with #NormalTaxRegime
Express Tribune
2 days ago
- Business
- Express Tribune
Textile industry for adopting proposals
Listen to article Pakistan Hosiery Manufacturers and Exporters Association (PHMA) and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) have jointly urged the government to consider and implement the textile industry's key budget proposals through the Federal Board of Revenue's (FBR) budget anomaly committee. The demand came during a post-budget meeting of both associations, which was attended by PHMA Chairman Abdul Hameed, former PHMA chairmen Naseer Butt and Shehzad Azam Khan, PRGMEA Chairman Dr Ayyazuddin and former PRGMEA chairmen Ijaz Khokhar and Sohail Afzal Sheikh. Meeting participants stressed that the government must not only examine industry recommendations through the anomaly committee but also implement the committee's final report once compiled. PHMA Chairman Abdul Hameed pointed out that Pakistan's value-added textile, apparel, bed wear, home textile and towel sectors contribute over $11 billion in annual exports and provide livelihoods to millions. He expressed concern over the replacement of the simplified Final Tax Regime (FTR) with the more complex Normal Tax Regime (NTR), which now subjects exporters to both 1% minimum tax and 1% advance tax on export proceeds, regardless of the actual profit. Former PHMA chairman Naseer Butt, while speaking at the meeting, said that dual taxation was counterproductive for an already distressed export sector. He warned that many small and medium enterprises (SMEs) were operating on thin margins and may be forced to close down if the policy was not reversed immediately. Shehzad Azam Khan, also a former PHMA chairman, highlighted the issues of refund delays, rising production costs and inflation. He stressed that exporters were burdened with more taxes than their earnings and demanded that the government urgently facilitate timely refunds and ensure stable energy pricing. PRGMEA Chairman Dr Ayyazuddin, in his remarks, raised concerns over changes to the Export Facilitation Scheme (EFS), particularly the removal of zero-rating on local purchases and the imposition of sales tax on imported cotton yarn. He emphasised that these changes undermine the very objective of the EFS, which was introduced to reduce liquidity pressure and digitise export procedures. Ex-PRGMEA chairman Ijaz Khokhar said that Pakistan's regional competitors like Bangladesh and Vietnam provide tax-free access to raw material for exporters, giving them an edge in international markets. He called for restoring the original EFS framework under SRO 957(I)/2021.
Business Recorder
11-06-2025
- Business
- Business Recorder
Sindh coalmining projects: FBR expands tax net
ISLAMABAD: The Federal Board of Revenue (FBR) has enhanced the scope of coal supply by persons engaged in coal mining project in Sindh. Finance Bill 2025-26 has revealed major legal and procedural changes in the income tax regime for business community on Monday. The coal supply scope of person engaged in coal mining projects in Sindh has been enhanced. Such person can now supply coal to any sector of economy and pay income tax on income from such supply and also can avail 100 percent tax credit on supply to power generation projects. The FBR has also reduced period of three years carry forward for adjustment of minimum tax on turnover to two years. Under the Bill, the powers of Officer of Inland Revenue to work out Fair Market Rent of a domestic or commercial property proposed to be curtailed to the extent of commercial properties. A flat 4% Fair Market Value (FMV) notified rates by Board or Deputy Collector proposed to be annual rental value of commercial properties unless actual rent declared justified through evidence. It has been proposed that any purchase from an unregistered person will make the purchaser liable, shifting the focus to those buying from the unregulated market. In such cases, 10% of the purchase-related expenditure will be disallowed. The Bill has proposed that 50% of the expenditure related to purchases will be disallowed in case of payment is received in cash against a single invoiced sale transaction exceeding rupees two hundred thousand by a vendor. Proportionate depreciation deduction disallowance for the tax year if withholding tax not deducted by the withholding agent. Disallowed amount will not become part of written down value of such capital assets. No adjustment of brought forward accumulated business losses available to taxpayer in the first tax year and subsequent tax years under Normal Tax Regime after switching from prior applicable Final Tax Regime. Under the new law, period of amortization of an intangible asset having undeterminable useful life has been reduced from 25 years to 15 years. As per new Bill, limitation period of 180 days provided for completing proceedings for amendment of assessment has been withdrawn. Appeal procedure before appellate fora has been majorly reverted back to the period which was in vogue prior to Tax Laws (Amendment) Act, 2024. The recovery proceeding for immediate payment or specified time limit in the notice against a taxpayer can only be initiated where the decisions at both the forums i.e. Appellate Tribunal and High Court, are against the taxpayer. Board power to grant condonation has been restricted to an aggregated period of two years and in the case of huge revenue loss, the same can be extended for a longer period by processing through a committee. All the entities in a group structure has been made mandatory to derive income chargeable under Normal Tax Regime for availing group relief. xiv. Table (I) and Table (II) of clause (C66) of Part I of Second Schedule to the Ordinance listing entities granted complete exemption on any income and exemption subject to 100C provision respectively have been merged. Now all entities require approval under 100C to be declared as Non-Profit Organization and availing exemption against income, Finance Bill added. 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
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.
