The All Pakistan Textile Mills Association (APTMA) has urged the FBR to adjust the 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 press statement, Chairman APTMA Mr Kamran Arshad said that the industry, especially the export-oriented textile industry, which has been facing serious liquidity issues for the last several months due to a slowdown in export orders and an overall poor business environment, is not in a position to make massive tax payments in one go. He further said that the payment of super tax in a single tranche would not only disrupt the day-to-day operations of the ailing textile industry but would also lead to an overall deterioration of the national economy.
Mr. 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 to 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 for payment of Super Tax in hundreds of billions of rupees would not only drain working capital but would also upset cash flows and make it difficult for most businesses to meet day-to-day business obligations, including payment of salaries, utility bills and other financial commitments.
Mr. 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 instalments, so that the taxpayers may meet their super tax liabilities in a reasonable period without negatively impacting their business operations.
Mr Kamran Arshad 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, FBR needs to meet with APTMA and other stakeholders to work out the details of imputable income for clarification on the application of Super Tax under Section 4C, to save exporters from different interpretations of imputable income.
Mr Kamran Arshad emphasised that recovery should be suspended immediately till these concerns are resolved.
Mr Kamran Arshad reiterated that if the FBR does not provide relief to the industry in paying the Super Tax liability in a workable manner, it will undoubtedly lead to large-scale business closures, 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 rather than expanding it, and would lead to the unemployment of hundreds of thousands of workers.
