PBC
The Pakistan Business Council (PBC) has urged the government to reduce the withholding tax by 2% on export receipts, particularly for low-margin items.
This demand was presented during a meeting between the Federal Minister of Finance, Muhammad Aurangzeb, and the PBC members. The meeting focused on various strategies to strengthen exports, improve taxation policies, and support economic stability.
A key recommendation from the discussion was a review of the Export Facilitation Scheme, proposing that domestic industries should be allowed to supply goods to exporters without the imposition of sales tax. PBC believes this revision would boost domestic production and strengthen export supply chains.
The Council emphasized the importance of negotiating lower tariffs on textile and apparel exports made from U.S. cotton, highlighting Pakistan’s status as the largest consumer of this raw material.
Additionally, members stressed the need to promote exports of non-traditional goods by unleashing significant underutilized capacity in various sectors.
During the discussion, the finance minister provided an overview of Pakistan’s progress in addressing twin deficits and outlined measures being taken to ensure the current IMF program becomes the final one.
He appreciated the contributions and sacrifices of the formal sector, which has borne the burden of front-loaded tax measures under the IMF program. He assured PBC members that as fiscal space improves, efforts would be made to ease this tax burden.
The members also highlighted the challenges posed by the informal sector, which creates an unlevel playing field for formal businesses. In response, the finance minister urged the formal sector to assist the government in identifying tax evaders.
He reiterated the government’s focus on transforming the Federal Board of Revenue (FBR) by leveraging technology to broaden the tax base and ensure transparency.
PBC’s contributions to economic policy and advocacy were recognized during the meeting. The minister commended PBC’s research, particularly its Make-in-Pakistan initiative and its recent report differentiating between good foreign direct investment (FDI) and bad FDI.
He also acknowledged the progress made by the FMCG sector in import substitution, though he opposed indefinite protectionist policies, advocating instead for support linked to achieving export targets.
The discussion concluded with PBC Chairman Shabbir Diwan appreciating the economic progress achieved over the past nine months.
He emphasized the vital role of PBC member companies, which contribute one-third of direct taxes, generate 40% of exports, and provide employment to millions through extended value chains.
The finance minister, accompanied by his advisor Khurram Schehzad, concluded the session by requesting PBC CEO Ehsan Malik to summarize the meeting’s key points and share the members’ proposals for further consideration.
The meeting underscored the government’s collaboration with the private sector to drive sustainable economic growth and improve Pakistan’s overall economic outlook.
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