The SME Exporters urge FM to save the sector from huge losses

Jun 20, 2024 |

The Union of Small and Medium Enterprises (UNISAME) expressed shock at the discontinuation of the fixed tax regime (FTR) facility for exporters and the imposition of almost three times the amount of tax under the old FTR system.
President UNISAME Zulfikar Thaver said the SME exporters fail to understand the wisdom and rational behind this extraordinary increase in tax imposed on the majority sector already in turmoil. The tax system has to be equitable just and fair and not detrimental to growth and progress.
Thaver said the exporters were paying one percent withholding tax on the realization of export proceeds whether they made profit on the shipment or not.
He added that in the export of commodities and food items all over the world the duties and taxes are bare minimum. In the recent budget the government has announced 29 percent tax on profits in addition to the 1 percent withholding tax which would be deducted on realization of proceeds. It is pertinent to note that food, medicine and clothing are always spared from harsh taxation and enjoy a soft corner to make life easy for the common man. It seems the finance ministry has forgotten all norms of welfare state and social economics.
The UNISAME Council members explained that 1% on realization was amounting to almost Rs 10000 on a realization of Rs 1 million but now the exporters will have to pay almost 30000. Also super tax wherever applicable on a realization of Rs 1 million
This will compel the exporters to increase their prices and this will make the goods not affordable for the buyer and as a result exports will get a setback and the exporters will lose their customers. Not only that but they will lose the markets gained by hard effort of years.
Pakistan is in dire need of foreign exchange and every single dollar is needed to pay for its imports. Pakistan is not a self sufficient country and depends on its exports and home remittances for its imports of essential items, oil, medicines, raw materials and parts for machinery and arms and ammunition for balance of power.
If exports decrease because of making them costlier due to exorbitant taxes than it will be a sorry state of affairs. Imports will suffer and exports will collapse.
The SME farmers also lamented with the SME exporters that most of their crops were purchased by millers on the demand from SME units who were processing the crops for exports. They too were shocked and surprised at the harsh decision to impose such exorbitant taxes on the exporters which would reflect on them and cause them irreparable loss.
The different segments of rice, maize, textiles, leather, commodities, pharmaceuticals and general merchandise have appealed to the government to reconsider the decision and restore the FTR system in the best interest of the majority SME exporters and the economy at large.

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