Page 16 - July/August 2019

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APTMA requests withdrawal AD

of 4pc withholding tax

As per APTMA letter addressed to the Chairman withholding tax on entire textile value chain will surely
FBR, 4pc withholding tax imposed on the entire hasten to the closure of these factories resulting in
textile value chain is creating more difficulties for the massive de-industrialization loss of revenue to FBR
industry ultimately leading to its closure. and unemployment of over a million people.’’

Mr Shahid Sattar, Advisor to APTMA said, “Yes, we The letter stated, quoting an example while looking at
have agitated the issue in the letter written to FBR the cotton purchase from the ginners, a 4pc
chairman mentioning that in repeated meetings both deduction from the ginners invoices will lead to
in and outside of FBR, in the presence of others it pressure on ginners to reduce the price they pay for
has been repeatedly stated that tax on domestic cotton procured from the farmer as their own tax
commerce was 1pc instead of 4pc as there is no liability in reality is only for ginning charges which
change in the income tax laws, rules and regulations. constitutes 35pc of the ginned cotton.
However, last night to our utter surprise and
disappointment a ‘clarification’ by FBR was issued This would lead to huge income tax refunds claims
stating that the withholding tax on the entire textile which have little chance if any of it being settled
value chain would be 4pc.” within any reasonable time frame. This is more
onerous than GST as there is no allowance of setoff
He added, “With the imposition of 17pc sales tax, of withholding tax deducted on inputs.
increase in turn over tax to 1.5pc and other issues, The letter in the end asks FBR to end 4pc
bulk of the industry was already on the verge of withholding tax on entire tax value chain and instead
shutdown due to non-profitability and extreme notify 1pc tax as was agreed in countless meetings
liquidity crunch. The final blow of 4pc imposition of with Industry at all levels of government.

July/August 2019