KATI Sounds Alarm: Fixed Tax Abolition Threatens Export Industry

KATI Sounds Alarm: Fixed Tax Abolition Threatens Export Industry

Karachi, June 24, 2024 – The Korangi Association of Trade and Industry (KATI) has issued a stern warning to the authorities, asserting that the proposed abolishment of the Fixed Tax Regime for exports will devastate the industry.

KATI President Johar Qandhari has strongly condemned the government’s move, cautioning that it will significantly impact exports and deter both domestic and foreign investment.

KATI President Qandhari expressed serious concerns over the proposed fixed tax regime, emphasizing its potential to inflict severe damage on the economy and exacerbate the challenges faced by industrialists. “The government’s proposal to implement a fixed tax regime on exports will only add to the difficulties of industrialists, rather than facilitating them to boost exports,” he stated. “The cost of production has already reached unprecedented levels due to various government policies, including high taxes and regulatory duties.”

Highlighting the current tax burden on industries—which includes income tax, sales tax, withholding tax, and regulatory duties— KATI President Qandhari pointed out that these can account for up to 50% of a company’s income. He argued that such a high tax burden makes it virtually impossible for industries to operate profitably. “No industry can sustain itself with a 50% tax on income. It is becoming increasingly difficult to run industrial operations under these conditions,” KATI President added.

Qandhari voiced concerns that the proposed policy could completely halt foreign investment and lead to the closure of existing industries. He contrasted Pakistan’s approach with that of neighboring countries like India and Bangladesh, which provide extensive support to their exporters, including ministerial assistance and special protocols. These measures enable them to enhance their industrial growth and presence in global markets by offering competitively priced products.

“In Pakistan, exporters are being treated as adversaries, stripping them of their right to conduct business,” KATI President remarked. “Rather than expanding the tax net to increase revenue, the government is unfairly burdening the existing taxpayers.”

He called for immediate reductions in electricity and gas prices, along with the withdrawal of the proposed fixed tax regime on the export sector, to facilitate increased domestic exports. “The government must take urgent steps to support exporters and promote industrialization to prevent economic decline,” he emphasized.

Qandhari’s warning comes as the industry grapples with rising production costs and a challenging economic environment. The proposed fixed tax regime on exports is seen as a move that could further destabilize the already struggling sector, with far-reaching implications for the broader economy.