Several Pakistani value-added textile firms recently rejected the government decision to discontinue zero-rated status of five export-oriented sectors, cautioning that the move will lead to flight of capital and high unemployment and affect the manufacturers. It will also lead to corruption through flying invoices, over-invoicing and refund fraud, they said. Significant volumes of liquidity being stuck in the form of sales tax refunds will also severely slow down export growth in the next few months, a report in a Pakistani business daily quoted them as saying. Collecting sales tax and then refunding is a futile exercise, which only leads to hassles for exporters and leads to corruption, they said. The government should also initiate strong steps to raise the taxpayer base to help the country overcome its monetary deficits, they said. Most major chambers of commerce and industry in Pakistan have also supported the stance.
Source – Fibre2Fashion.
