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LAHORE, Feb 02 (APP): All Pakistan Textile Mills Association (APTMA) has urged the FBR (Federal Board of Revenue) to adjust Super Tax liability following the recent decision of the Federal Constitutional Court against outstanding Sales Tax, Income Tax and other refunds pending for payment by the government to manufacturers and exporters for years.
In a statement shared with media by A PTMA spokesman here Monday, the Association Chairman Kamran Arshad said that industry, especially the export-oriented textile industry which is facing serious liquidity issues since the last several months due to a slowdown in export orders and an overall poor business environment, are not in a position to make massive tax payments in one go. He added, the payment of super tax in one tranche would not only disturb the day-to-day business activities of the textile industry but also lead to overall deterioration of the national economy.
Kamran Arshad said that demanding payment of Super Tax in a single tranche is neither practical nor workable as the industry is grappling with an acute liquidity crunch due the high cost of doing business, including high energy prices, double-digit interest rates, excessive taxation, and large-scale import of raw material and intermediate inputs displacing domestic upstream segments. He further said that the immediate demand of payment of Super Tax in hundreds of billions of rupees would drain working capital and also upset cash flows, making it difficult for most businesses to meet day to day business obligations including payment of salaries, utility bills and other financial commitments.
Kamran Arshad urged the FBR, in the best interest of the economy and industry, to adjust Super Tax liabilities against long-pending income tax, sales tax and other refund claims like TUF and DLTL, and the remaining liability should be converted into easy business-friendly installments, so that the taxpayers may meet their super tax liabilities in a reasonable period without negatively impacting their business operations.
APTMA highlighted that computation of Super Tax under Section 4C in respect of exporters is required to be based on imputable income as they remained subject to the Final Tax Regime (FTR) up to Tax Year 2024. Imputable income for the purpose of Section 4C for exporters should be worked out by reverse calculation of income corresponding to the tax already paid under FTR, so as to arrive at an equivalent tax liability under the Normal Tax Regime.
In view of the widespread implications for the export-oriented textile sector, he suggested, FBR needs to sit with APTMA and other stakeholders to work out details about imputable income for generic clarification on the application of Super Tax under Section 4C in order to save exporters from different interpretations on imputable income.
Kamran Arshad emphasized that recovery should be suspended immediately till these concerns are resolved. He apprehended, if the FBR does not provide relief to the industry in paying the Super Tax liability in a workable manner, it will lead to large-scale closure of businesses, including SMEs and export-oriented textile mills which are the source of much needed foreign exchange for the country.
This would also have a further negative impact on the economy by shrinking the tax base instead of expanding it, and lead to unemployment of hundreds of thousands of workers, he concluded.