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April 8, 2020

Branded chain stores demand govt to suspend taxes

Top Story

April 8, 2020

ISLAMABAD: Over 200 branded chain stores having 20,000 retail outlets countrywide have demanded of the government to suspend collection of all federal and provincial taxes besides slashing down the GST rate to 6 percent for protecting their businesses from collapse in the aftermath of outbreak of COVID-19 pandemic.

In a written letter to Prime Minister Imran Khan and his economic ministers, the branded retail chain stores, which are known as tier-1 and connecting with Point of Sale (POS) software developed by the FBR, also asked the government for providing direct wage support to 600,000 employees of the organized retail sector, arguing that it would be their first priority to retain their skilled workforce. They are wondering that how long they could provide salaries to a huge number of employees in the presence of lockdown, so they need immediate financial support from the government to avoid lay-offs.

The retail sector contributes 18 percent into the country’s GDP and is the second largest sector after agriculture for providing employment to 16 percent workforce.

The Chainstore Association of Pakistan (CAP) runs approximately 20,000 outlets all over the country and employs over 600,000 workforce has forwarded four major demands to the government for seeking tax relief, provision of availability of working capital and overcoming rental and providing of salaries to their employees. Over 50 sectors are allied with the retail sector, including spinning, weaving, tanning, dyeing, processing, stitching, assembling and packaging businesses. In their written demands sent out to the PM, the Chainstore Association of Pakistan demanded of the government for suspension of payments for all federal and provincial taxes till COVID-19 was eradicated from Pakistan, for a minimum of six months.

They also asked for reduction in the GST rate up to 6 percent arguing that businesses would no longer be viable at 14pc-17pc of GST rate with reduced purchasing power in the country. On the working capital crisis, they demanded of all principal payments deferred for one-year and interest payments waived for one-year. They proposed to the government for new low cost/interest free loans against the current assets only to retail sector (especially those companies that do not have existing loans) with SBP ensuring disbursement of new loans within 30 days.

The CAP also demanded of the government for direct wages support (partial if not full) to retained employees in their bank accounts/mobile accounts for three months. Talking to this scribe, Asfandyar Farrukh, Managing Director Hub Leather, said that the retail businesses were suffering before the Covid-19 crisis due to the economic slowdown and burden of additional taxes in the last budget.