The All Pakistan Textile Mills Association (APTMA) on Monday urged the Federal Board of Revenue (FBR) to adjust a Super Tax liability against outstanding sales tax, income tax and other refunds pending for payment by the Government of Pakistan to manufacturers and exporters.
Last week, the Federal Constitutional Court declared as valid the “super tax” levied on high-earning individuals and companies in 2022. Following the decision, the FBR is expected to generate around Rs. 300 billion in additional revenue.
Reacting to the development in a press statement, APTMA Chairman Kamran Arshad said the textiles industry, particularly export-oriented companies, are in no position to deposit a massive tax payment amidst serious liquidity issues due to a slowdown in export orders and an overall poor business environment. He said the payment of super tax in one tranche would not only disturb the day-to-day business activities of the ailing textile industry but would also lead to overall deterioration of the national economy.
According to Arshad, demanding the entire super tax payment in a single tranche is neither practical nor workable when the industry is facing high-energy prices, double-digit interest rates, excessive taxation, and large-scale import of raw material and intermediate inputs. He warned the immediate demand for the super tax risked draining working capital and upsetting cash flows, making it difficult for most businesses to meet day-to-day obligations, including payment of salaries, utility bills and other such commitments.
In his statement, the APTMA chairman has urged the FBR to adjust the super tax liabilities against pending refunds and convert the remainder into easy business-friendly instalments. This, he said, would enable taxpayers to meet their super tax liabilities in a reasonable period without negatively impacting their business operations.
Arshad highlighted that computation of Super Tax under Section 4C in respect of exporters is required to be based on imputable income as they remain subject to the Final Tax Regime 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 the regime, he said, to achieve an equivalent tax liability under the Normal Tax Regime. He urged the FBR 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.
The APTMA chairman emphasized that recovery should be suspended immediately till these concerns are resolved. He warned that if the FBR does not provide the necessary relief, it could lead to a mass closure of businesses, including export-oriented mills providing foreign exchange to the country. This, he warned, would also further shrink the tax base and boost unemployment.