Press Release

Withdrawal of zero-rated facility causes unrest

The Lahore Chamber of Commerce & Industry has urged the government to restore zero-rating regime for five export sectors as it has caused unrest among the businessmen. The LCCI President Almas Hyder, Senior Vice President Khawaja Shahzad Nasir and Vice President Faheem Ur Rehman Saigal said that export revenues will also be affected by the withdrawal of this zero rated facility and this will potentially create a balance of payment crisis for the economy.

They said that the Government should introduce an automatic and efficient system of Refund Payments whereby 75% of the Refunds should be paid through the Bank upon the issuance of the attested copy of Bill of Lading while the remaining 25% of Refunds should be paid through the Banks against the export proceeds after 30 days.

They said that government has announced withdrawal SRO 1125 under which five export oriented sectors are exempted from sales tax and its withdrawal will add burden to the government exchequer beside hitting the national exports badly.

The LCCI office-bearers were of the view that announcement made in the Federal Budget Speech 2019-20 has created unrest amongst the exporters who are working in difficult circumstances but making their all out efforts to bring much-needed foreign exchange in the country. Withdrawal will squeeze the working capital of the industry and dry out liquidity from the market.

They suggested that instead of opting illogical measures of withdrawal of zero-rated facility, government should devise such a proper mechanism that can lead export-led growth.

“Textiles, leather, carpets, surgical instruments and sports goods as major part of exports is associated with these sectors”, they said and added that five-zero rating sectors are documented and contributing around 70% of total exports and 50% in employment”, they said and added that withdrawal of zero-rated facility will throw these sectors in disaster. 

The LCCI office-bearers said that exports of the country are already at a crucial stage because of poor ranking in ease of doing business, high input cost and a large number of duties and taxes. They said that any step in wrong direction like discontinuation of zero-rating regime will pose immense economic challenges.

They said that continuation of zero-rating facility for the export-oriented sectors would go a long way and help promote country’s exports and would also boost the trust of not only local businessmen but would also give a very good message to the foreign investors. They said that zero-rating facility would also bring down the industrial cost of doing business and Pakistani products would be able to win their due share in the international market.

The LCCI office-bearers said that country cannot afford to lose international export market therefore government should continue zero rating facility for the export-oriented industry in the larger interest of the economy.