950815

Garment makers write to CBR

No advance tax

exemption for

small exporters

MUZAFFAR QURESHI

KARACHI: The Central Board of Revenue has withdrawn advance tax exemption from small exporters under the new Income Tax Ordinance, exporters revealed.

They said that previously units, which exported 95 percent and above of their total production, were exempt from payment of advance tax under SRO 368(1) 1994 dated May 7, 1994. But the 1995 Income Tax Ordinance has amended the eligibility conditions for claiming exemption.

Under the new Ordinance those companies which export goods worth of Rs. 1.5 million or above will enjoy immunity from advance tax payment.

The Chairman of Pakistan Garments Manufacturers and Exporters Association, Naim Suria in a letter to the CBR has objected to the new rules for exemption, which remove the distinction between the large exporting firms and small exporting units.

Requesting the Income Tax member, CBR, to clarify the new definition for exemption from advance tax, the PRGMEA zonal chairman said that the new rule will discourage small exporting units which export their entire production but will get no reward.

He pointed out that the new rule, which seems to benefit large exporters, is contrary to the avowed government policy of encouraging small and new exporters.

He said that the garments industry, which contributes substantially to the exchequer by earning foreign exchange, is already facing a crisis due to various problems including increase in utility rates. Besides, the curtailed rates of duty drawback will render Pakistani garments incompetitive in the world market. The additional burden of advance tax will result in collapse of the export-oriented units specially small ones, he added.