The All Pakistan Textile Mills Association (APTMA) has warned that the government’s ‘regressive taxation policies’ may lead to the permanent closure of textile factories in Pakistan, resulting significant job losses.
Expressing deep concern over the impact of SRO350(1)/2024 and the recent removal of the sales tax exemption on local supplies for export manufacturing, APTMA argued, these actions are crippling the industry with severe consequences for employment, external sector stability, and the overall economy.
Despite repeated appeals from industrial stakeholders and assurances from senior officials, APTMA criticised the Federal Board of Revenue (FBR) for continuing to enforce what it described as a ‘dysfunctional policy’ that harms manufacturers across Pakistan. The association noted,the operational challenges introduced by SRO350 have compounded the difficulties already faced by the textile industry.
APTMA explained,the requirement to link the entire supply chain to file sales tax returns has created significant obstacles. Many of its members, along with other firms nationwide, are struggling to meet the filing deadlines because their upstream suppliers have not filed their returns. Furthermore, the FBR has eliminated the option to delink invoices from the return, worsening the situation.
APTMA urged the government to immediately amend SRO350(1)/2024 in consultation with industrial stakeholders who are most affected by it. The textile sector cannot endure further delays in addressing this issue, which has already caused substantial damage, the association warned.
Additionally, APTMA called for the reinstatement of the sales tax exemption on local supplies for export manufacturing. The association argued that the withdrawal of zero-rating on these supplies under the Finance Act 2024 was not driven by revenue needs but was instead a reaction to FBR audits that identified misuse by a small number of firms out of approximately 1,900 beneficiaries.
APTMA urged the government to restore the zero-rating on local supplies under the Export Facilitation Scheme (EFS) and to implement stronger checks and balances to prevent misuse, rather than resorting to measures that further accelerate the deindustrialisation trend harming Pakistan’s economy.
