FPCCI demands five-year tax exemption for exports sector

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) advised the government to consider exempting export-oriented sectors from all the taxes in the upcoming five-year trade policy framework, industry officials said on Monday.

FPCCI submitted its set of recommendations for the proposed strategic trade policy framework (2018-2023), which would soon be announced by the commerce ministry, the officials, who are aware of the proposals, said.

Officials at the FPCCI said the chamber wants absolute tax-exemption for exports sector. “If it is not possible then the government should compensate the cost by way of compensatory export rebates,” an official said, citing the FPCCI’s proposals.

The FPCCI said the cost of doing business is very high in Pakistan as compared to regional economies. It said the regional economies offer huge incentives to their exporters and manufacturers in terms of subsidies and rebates.

The apex trade body said gas and electricity tariffs are very high in the country. Gas tariff in Pakistan is $7.65/unit as compared to India $4.5, Vietnam $4.2 and Bangladesh $3.1. Similarly, electricity tariff in Pakistan is 22 percent higher than Bangladesh and India.

Total taxes for exporters in Pakistan after including indirect taxes and other levies are 11 percent, much higher than Bangladesh. Huge amount of exporters were stuck with the government on account of sales and income taxes and rebate refunds. “This is legitimate right of the exporters which should be released within time to avoid problem of liquidity crunch,” the FPCCI said.

The apex trade body said the government should implement trade enhancement package amounting to Rs180 billion announced by the prime minister in January last year “in true spirit to support exporters and enhance exports”.

The trade body said Pakistan’s economy has numerous challenges, particularly for the exports, which have been showing downward trend for the last three to four years and fell to $20 billion from $25 billion in the past four years.

“And, for the first time in the history the imports went up to $52 billion leading trade deficit to $32 billion during the fiscal year of 2016/17,” it added. “The rising trend in trade deficit is a drastic indicator for the economy of Pakistan, which needs to be controlled.”

The FPCCI said the most problematic factors for traders include tariff and non-tariff barriers, burdensome import procedure, corruption, inappropriate telecommunication and weak infrastructure, access to finance, unidentified potential markets, and inappropriate production technology and skills.

The apex trade body said China-Pakistan Economic Corridor (CPEC) is very important for domestic market for future trade and economy. The FPCCI demanded the government to clarify the CPEC routes and the project’s implications, such as import of Chinese labours and materials.

The FPCCI also advised the government to launch trade portal for providing services to entrepreneurs in match-making, marketing, information search regarding new markets and value-addition of products. “This is responsibility of the commerce ministry and Trade Development Authority of Pakistan to create the trade portal for Pakistani entrepreneurs.”