Textile exporters in Pakistan are protesting against the latest federal budget as it imposes a 29 per cent tax on their profits, thus eliminating their previous exemption.
Additionally, the budget also revises the existing 1 per cent tax on revenue, compelling companies that do not turn a profit to still pay this tax.
Historically, Pakistan has faced recurring balance of payments crises, prompting the government to support exporters with tax breaks and substantial subsidies to boost their international competitiveness. However, in this year's budget, the government had to choose between either cutting the benefits for exporters or reducing its own expenditures. It opted for the former.
This decision has sparked heavy criticism not only from the textile industry but also from the broader business community, including sectors that have long advocated for taxing the textile sector. The backlash highlights the contentious nature of the new tax regime.