Karachi, October 18, 2024 – Major textile exporters have raised concerns about Pakistan’s international reputation following the Federal Board of Revenue’s (FBR’s) aggressive crackdown on sales tax fraud. The Pakistan Textile Council (PTC), representing leading textile and apparel exporters, has issued a stark warning that foreign buyers are losing confidence in the country’s credibility due to the FBR’s recent actions.
In a letter addressed to Prime Minister Shehbaz Sharif, the PTC urged the government to halt the FBR’s ongoing campaign, which they described as a “disturbing and unjustified harassment” of exporters and manufacturers. The textile sector, which accounts for nearly 30% of Pakistan’s total exports, is facing severe disruptions as a result of the FBR’s aggressive approach, the council noted.
While the PTC reaffirmed its commitment to supporting legitimate efforts to combat tax evasion and fraud, it condemned the current crackdown as disproportionately harmful to lawful businesses. “This campaign is not only damaging Pakistan’s most crucial industries but is also jeopardizing the economic recovery that your administration has worked tirelessly to achieve,” the PTC said in its letter to the prime minister.
The council expressed deep concern over the FBR’s alleged misuse of governmental authority, accusing the tax body of intimidating entrepreneurs and executives under the guise of fighting tax fraud. “These unlawful actions are doing more harm than good, eroding business confidence and demoralizing the very sectors that generate employment and drive exports,” the PTC warned.
The international fallout has been swift. According to the PTC, foreign buyers of Pakistani textiles have already raised red flags, voicing concerns about the country’s reliability as a supplier. This erosion of trust could have devastating consequences for Pakistan’s export economy, leading to suppressed economic activity, job losses, shrinking exports, and ultimately, further strain on tax revenues.
While the PTC emphasized its support for holding bad actors accountable, it strongly opposed what it called the “collective punishment” of the entire business community. “This will not yield higher legitimate revenues nor will it result in meaningful improvements in tax governance,” the council stated. “The root cause of Pakistan’s low tax-to-GDP ratio lies with the corrupt machinery of the FBR itself, not with law-abiding businesses.”
The PTC urged Prime Minister Sharif to intervene personally to end what it described as the FBR’s “reign of terror” and to foster a more constructive relationship between the tax authorities and the business community to ensure sustainable economic growth.