PBC calls for 2% withholding tax cut on exports

December 17, 2024 (MLN): Pakistan Business Council (PBC) urged the government to reduce the withholding tax by 2% on export receipts for low-margin items, during the meeting between Muhammad Aurangzeb, the Federal Minister of Finance, and the members of PBC.

This meeting also recommended a review of the Export Facilitation Scheme to allow domestic industry to supply exporters without the levy of sales tax, as per the press release issued yesterday.

On Textiles, PBC stressed negotiating lower tariffs on apparel exports made from US cotton, of which Pakistan is the largest consumer.

Members offered recommendations on promoting exports, especially of non-traditional goods by encouraging the unleashing of the significant under-utilised capacity.

The minister briefed the Council on the improvement in the twin deficits and listed the measures the government is undertaking to ensure that this IMF program becomes the last such program.

He appreciated the sacrifices that the formal sector had to make in the front loaded tax measures under the program and assured that, as and when the fiscal space permits, this burden would be eased.

On taxation, the unlevel playing field vs. the informal sector was highlighted by members and the minister requested support from the formal sector to identify such evaders.

The minister, who was accompanied by Khurram Schehzad, Advisor to the Finance Minister, lauded the quality of PBC’s research and its objective advocacy, especially on taxation and through its Make-in-Pakistan theme.

He specially commended PBC’s report that differentiated between good FDI and bad FDI.

Members offered recommendations on promoting exports, especially of non traditional goods by encouraging the unleashing the significant under utilised capacity.

On import substitution, the minister lauded the progress made by the FMCG sector on indigenising inputs.

However he was opposed to protection without a sunset clause and favoured supporting those that achieved a certain percentage of export sales.

He also shared the progress on transforming the FBR and infusing it with technology to broaden the tax base.

During a wide ranging discussion on the economy during Federal Minister of Finance visit to PBC yesterday, its Chairman Shabbir Diwan appreciated the significant progress the country has made over the past nine months in achieving economic stability.

This was echoed by PBC members who between them pay a third of direct taxes, generate 40% of exports and employ millions in their extended value chains.

In closing the discussion, the minister requested the PBC CEO Mr Ehsan Malik to summarise the discussion and share the members proposals.

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