Tag: PYMA

KARACHI: Pakistan Yarn Merchants Association (PYMA) on Tuesday demanded the government to allow duty free import of cotton and cotton yarn through land routes, including India.

The PYMA appealed to Prime Minister Imran Khan to take steps to reduce the cost of production of the value-added textile industry, in view of the shortage of cotton, cotton yarn and the skyrocketing prices and allow duty-free import of cotton and cotton yarn from Turkey, India and Uzbekistan by land. So that exporters can compete in the ongoing price race in international markets.

In the appeal to Prime Minister, Hanif Lakhany, Vice President, Federation of Pakistan Chambers of Commerce & Industry (FPCCI) & Senior Vice Chairman Pakistan Yarn Merchants Association (PYMA), Farhan Ashrafi, Vice Chairman PYMA and convener FPCCI’s Central Standing Committee on Yarn Trading, said that the value-added sector in the country is facing immense difficulties due to shortage and price of cotton and cotton yarn reaching record levels, as cotton yarn is not available to these export industries even at high prices as per the production demand.

“If this situation continues, not only will it be difficult to fulfil export orders, but Pakistani exporters will also lose the ability to compete in global markets. Which could have a negative impact on the country’s exports, so the government should seriously consider PYMA’s proposal in the best interest of the country’s economy”, they feared.

PYMA office-bearers added that the exporters in the value-added sector are reluctant to accept new orders due to difficulties in procuring basic raw materials. Due to which these orders can be transferred to other countries.

Hanif Lakhany, Farhan Ashrafi appealed to Prime Minister Imran Khan to assist exporters in fulfilling old export orders in time and taking new orders, while also issue directives to allow duty-free import of cotton, cotton yarn from Turkey, India, and Uzbekistan by land. This will not only reduce the import period of raw materials but will also help in reducing the cost of freight charges.

Yarn traders demand restoring turnover tax rate at 0.1pc

KARACHI: Pakistan Yarn Merchant Association (PYMA) has demanded the government of immediate reduction in duty rates on import of polyester filament yarn to ensure bring down prices of the commodity.

Hanif Lakhany, Senior Vice Chairman PYMA and Vice Chairman Farhan Ashrafi urged the government to immediately remove additional customs duty at two percent and regulatory duty at 2.5 percent on the import of polyester filament yarn as an interim relief.

Furthermore, they demanded a review of tariff structure on the entire polyester chain to make our user industry consisting mostly of small and medium size enterprises competitive to enhance our exports.

They termed catastrophic for small and medium enterprises (SMEs) over not reviewing the tariff structure of polyester chain and not allowing immediate duty-free import of cotton, polyester cotton and polyester filament yarn by the government, and feared that the textile industry would be ruined if it was not possible to supply raw materials at reasonable prices as per the production demand.

PYMA office bearers met with a delegation of polyester yarn users, industrialists, importers and traders, raising their concerns, they said that the government is aware that cotton production has declined this year, while the skyrocketing prices of polyester filament yarn, the main raw material for the textile industry, have pushed up production costs to an unbearable level

“As a result of higher prices in the local market, small and medium enterprises (SMEs) have no choice but close their units, if nothing is done to alleviate the pain of super high prices, it may be posing a grave danger to the fragile export growth”, they pointed out

PYMA office bearers said that we really appreciate that the government is seriously considering measures to tackle the escalation of cotton yarn prices but there is also a need to review the current tariff regime of the Polyester Chain, if we really want Pakistan to be truly competitive in the international market.

“Polyester filament yarn is subjected to 11% customs duty, 2% additional customs duty and 2.5% regulatory duty in addition to Antidumping duty ranging between 3-11% despite of the fact that local manufacturers of polyester filament can only meet less than one third demand of the user industry”, they added, these local manufacturers of polyester yarn enjoy tremendous tariff protection at the cost of very large small and medium size enterprises to the detriment of our stated public policy to make our value added industry competitive.

KARACHI: Pakistan Yarn Merchants Association (PYMA) has demanded incentives in rates of duty and taxes in order to reduce the cost of production, according to a statement issued on Thursday.

The issues were raised at a meeting of yarn merchants with Member Inland Revenue (Operations) Federal Board of Revenue (FBR) held last week.

The office bearers of Pakistan Yarn Merchants Association (PYMA) demanded the Member of abolishing 3 percent value added tax on commercial importers at import stage, impose uniform Withholding tax for industrial & commercial importers, and abolish regulatory duty, additional customs duty on polyester filament yarns, and reduction of tax rate on POY.

Member Inland Revenue was informed that the 3 percent value addition sales tax at import stage is quite unreasonable on the import of raw materials because it is impossible to sell a commodity like yarn at gross profit margin of 17–18 percent. Their margin is ranging between 2 to 5 percent and this tax is un-necessary burden. It must be withdrawn or at least reduced to 1 percent.

They insist for rationalization of withholding tax regime at import stage on all kind of imports for commercial & industrial importers (1 percent for capital goods, 2 percent for raw materials and 5.5 percent on finished goods) i.e. 1 percent.

Imposition of 2.5pc regulatory duty on polyester filament yarn (5402-3300, 5402-4700), POY (5402-4600) & air covered yarn (5402-6200) is unjustified as PFY is an important raw material for weaving, knitting & home textile.

“It would justify the cascading system of polyester value chain. This is essential to provide protection to upstream & downstream participants of cascading system of polyester value chain & if implemented successfully, will result in massive employment & investment opportunities”, PYMA delegation added.

It encourages fake invoices resulting in revenue losses to government, when goods are sold to unregistered buyers. We believe this tax is counterproductive & more creative approach is required to achieve the goal of documentation.

On one hand, it deprives the payment of an un-adjustable 17 percent direct payment on sales to un-registered persons, and on other hand loss of precious revenue of the government exchequer occurs.

PYMA delegation pointed out anomaly in rate of turn over tax on yarn. Traders of yarn deal in high volume & nominal rate of profit margin. They purchase yarn from spinners & sell to weaving sector with a nominal margin of 1pc or even less.

As per SRO – 333(1)/2001 Dated. 02.05.2011, the yarn traders are subject to turn over tax at concessional rate of 0.1 percent which constitute about 10pc of their margin.

Therefore, FBR should remove the anomaly by insertion of the provision of minimum turnover tax at 0.1pc for yarn traders in the first schedule part–I, Division–IX.

On the occasion, Dr. Muhammad Ashfaq Ahmed, member (Inland Revenue – Operations) Federal Board of Revenue, assured the delegation that the agenda presented by PYMA would consider and would also inform the Ministry of Commerce & Ministry of Finance to include it in the upcoming budget.

FBR official also assured the delegation of his fullest cooperation with the aim of promoting business activities in the country and increasing government revenue.

KARACHI: Pakistan Yarn Merchants Association (PYMA) has demanded the Federal Board of Revenue (FBR) to restore one percent advance income tax for textile value chain.

In a statement on Tuesday, Muhammad Saqib Goodluck Chairman, PYMA (Sind & Baluchistan Zone) strongly protested over imposition of 4 percent withholding tax instead of 1 percent requested to withdraw recent clarification of FBR.

He said that during different meetings with FBR, imposition of 1 percent withholding Tax was agreed over Textile Value Chain (Doubling, Twisting, Knitting, and Weaving) but clarification from FBR says imposition of 4 percent withholding Tax instead of 1 percent on whole Textile Chain, is not acceptable at any cost.

Saqib Goodluck in his letter to Chairman FBR, Shabbar Zaidi has clearly refused to accept imposition of 4 percent withholding tax instead of 1 percent and declared this step of FBR as highly disastrous said that on total amount of every receipt, 4 percent advance income tax could not collected which will increase the cost.

On purchase of cotton from Ginners, deduction of 4 percent from invoice will increase pressure on Ginners to reduce cost of cotton.

In fact, they must be responsible for ginning charges which is 35 percent of ginned cotton. Similarly, from manufacturing of yarn up to manufacturing of cloth, imposition of every tax will develop highly negative impacts on cost and local raw material.

He further said that local manufacturers spinning units and commercial importers of yarn works at low margins but large volume, when it reach up to retails stage with reference to polyester chain, it comprises four to five stages.

If upon fourth or fifth stage, 4 percent tax deducted, then cost of raw material will increase and ultimately withholding tax will increase from total margin and cases of income tax.

Refund will increase, which takes a long time to receive. It will be more difficult than GST because deduction of withholding tax on input carries no subsidy.

A large number of production units are engaged in exports as well as sales in local market.

FBR while examining audited balance sheets of public listed companies and other companies that withholding tax received over lesser margin is how much excessive. Therefore, for the survival of whole textile value chain 1 percent withholding tax must be implemented.