President of PAHF, Shaikh Imtiaz Hussain, Appeals to Prime Minister and Finance Minister to Revoke New Tax Measures Impacting Exporters and Farmers
KARACHI: Exporters are raising alarms over a potential decline in fruit and vegetable exports due to the imposition of new taxes on export proceeds, which they argue will increase the financial burden on both exporters and farmers, making it difficult to remain competitive in the global market.
In a letter addressed to Prime Minister Shahbaz Sharif and Finance Minister Muhammad Aurangzeb, Shaikh Imtiaz Hussain, President of the Pakistan Agricultural and Horticultural Forum (PAHF), urgently called for the withdrawal of these new taxes introduced in the FY25 budget. He advocated for the restoration of the fixed tax regime to help exporters compete internationally.
Imtiaz voiced his serious concerns regarding the recent imposition of taxes under Section 154. Representing the agricultural sector stakeholders, he highlighted the negative impact of this decision and urged the government to reconsider to better support exporters.
He noted that taxing export income at a corporate rate of 29% and an applicable super tax will severely impact the country’s exports. Previously, exporters paid a flat 1% tax on processed exports, which was the final tax obligation for them.
Imtiaz warned that the new tax regime will add significant financial strain to the already struggling exporters of fresh fruits and vegetables.
He also expressed concerns over Section 25AB, which introduces non-bailable penalties for suspected tax fraud. “While aimed at curbing tax evasion, this section raises numerous issues and carries a significant risk of misuse and potential harassment without stringent safeguards. Innocent individuals and businesses may be unfairly targeted, causing severe distress,” Imtiaz stated.
He further mentioned that harsh penalties might deter legitimate investments, undermine investor confidence, and harm economic growth. The non-bailable penalties contradict principles of justice and fairness, potentially eroding public trust in the legal system.
Imtiaz urged the Prime Minister and Finance Minister to reconsider Section 25AB and seek alternative measures to combat tax fraud that do not carry the same risks.
He emphasized that agriculture is a cornerstone of Pakistan’s economy, significantly contributing to GDP and providing employment for a large portion of the population. Exporting agricultural produce not only generates valuable foreign exchange but also supports the livelihoods of numerous farmers and their families. The additional taxes on export proceeds will increase the financial burden on exporters and farmers, making it harder for them to compete globally.
Imtiaz suggested that while the decision to impose these taxes might have been driven by IMF demands for financial assistance, it is crucial to balance external demands with the needs and well-being of the local economy and citizens. He recommended that the government explore alternative measures that meet IMF requirements without harming the export sector.
Imtiaz concluded by urging the federal government to re-evaluate the decision to impose these taxes on the export sector to reduce the burden on exporters, thereby allowing them to continue their vital contributions to Pakistan’s economy.
