Islamabad, January 16, 2024 – The Federal Board of Revenue (FBR) has announced the rationalization of the negative list for sales tax input adjustment, paving the way for a more favorable business environment for five leading export-oriented sectors in Pakistan.
The FBR’s latest decision, effective Monday, entails the exclusion of several items from the Sales Tax General Order (STGO) Number 9 of 2023. This STGO had previously delineated a negative list comprising 714 items, restricting input tax adjustment for industries crucial to the country’s export landscape, namely textile, leather, carpets, surgical, and sports.
Under the revised framework, the FBR has granted manufacturers in these export sectors the liberty to adjust input taxes on industrial inputs essential to their production processes. This move is expected to facilitate growth and competitiveness within the specified industries, positioning them for increased global market penetration.
The FBR’s decision particularly emphasizes the inclusion of specific Pakistan Customs Tariff (PCT) headings, allowing the exclusion of certain raw materials, such as tubes, pipes, glass fibers, and more, from the confines of STGO 9 of 2023. This adjustment is seen as a strategic step to stimulate growth in the leather, sports, tents, and canvas sectors.
Prior to this amendment, the STGO 9 of 2023 had disallowed input tax adjustments on goods unrelated to the business activities of manufacturers within these export sectors. The negative list, which featured items outside the scope of their operational necessities, had been a point of contention for businesses seeking to optimize their production costs and remain competitive in the global market.
The FBR, in a statement, reiterated its authority to modify Annexures or conditions/benchmarks mentioned in the STGO as needed. This authority, the FBR clarified, is exercised in consultation with field formations holding jurisdiction over the export-oriented sectors. The move aligns with the government’s broader strategy to support and boost export sectors, thereby enhancing economic growth and stability.
Industry insiders have welcomed the FBR’s decision, recognizing it as a proactive measure to address the challenges faced by export-oriented businesses. The adjustment in the negative list is anticipated to streamline operations, reduce financial burdens, and foster innovation within the specified industries.
As Pakistan continues its efforts to strengthen its position in the global export market, such targeted policy interventions are crucial for ensuring a competitive edge. The FBR’s decision to rationalize the negative list reflects a commitment to fostering a business-friendly environment, promoting economic resilience, and bolstering the nation’s export capabilities.
