Non-availability of facilities

It is government declared policy to support, encourage and facilitate:

i) Small and medium enterprises (SME)

ii) Women entrepreneurs specially female apparel designers

iii) Tailoring workshops by small tailors

iv) Tailors

v) Training institutes

vi) Job creation

However, in actual practice these sectors are being penalized and NOT getting the benefits available to the large organized Export units.

The SMEs, women entrepreneurs, small tailoring workshops, tailors, training institutes and individuals do not get these benefits since they have to buy their requirements from the local traders who pay:

i) Import Duty - 03.0603%; and ii) Sales Tax - 21.014% (20% on 105.0703%); iii) Income Tax - 07.5651% (6% on 126.0844%) – Total: 31.6394% (32%).

To pass on these levies to small and medium exporting units, SMEs, tailoring workshops, women entrepreneurs, training institutes and others when they purchase duty-paid, sales tax-paid and income tax-paid apparel machinery locally in PKR is crushing them with an additional burden of 32% which are not being levied on large textile industrial units registered with Ministry of Textile Industry.

The large organised export apparel units registered with Ministry of Textile Industry are exempted from duty, sales tax and income tax - as specified in Part IV of the Fifth Schedule to the Customs Act,1969 (IV of 1969) subject to conditions as specified therein:

It is only required that the unit should be a textile industry. Once the unit is registered with Ministry of Textile Industry it is eligible for the duty free and sales tax free import under following SRO/notification:

i) Customs duty free on import of all apparel machinery - Chapter 84

Imports of Plant, Machinery, Equipment and Apparatus, including Capital Goods for various industries/sectors - as specified in Part IV of the fifth schedule to the Customs Act, 1969 (IV of 1969) subject to the same condition therein. Respective headings; rate of duty 0%.

ii) Sales tax free on import of all apparel machinery - Chapter 84

SRO 1125(l)/2011 dated 31stDecember, 2011 Pakistan Sales Tax ACT 1990 Machinery, not manufactured locally, if imported by textile industrial units registered with the Division to which business of the textile industry stands allocated and as specified in part IV of the fifth schedule to the Customs Act, 1990 (IV of 1969) subject to the same condition therein - Respective headings; rate of sales tax 0%.

iii) Income tax free on import of all apparel machinery by Textile Exporters - Chapter 84 - Under Section-148.

Asif Ali Rashid

-FCA Chairman Almurtaza Machinery Co. (PvT) Ltd