STAFF REPORT ISB: Pakistan textile industry is impaired due to heavy taxes and surcharges, rendering it uncompetitive compared to regional economies. Other irritants include energy tariff, under utilization of power generation capacity and energy shortage, says a research report prepared by the APTMA.
The export sector is subject to five percent duties, taxes and surcharges, while competitors in India enjoy tax-free regime on exports of textile products, while in Bangladesh and China, levies on exports are around one percent.
The report, citing the World Trade Organization, said this tax structure resulted in only 18 percent growth in Pakistans textile and clothing exports during 2006-2014, while Bangladesh posted 175 percent growth, China 107 percent and India 96 percent during the same period.
The All Pakistan Textile Mills Association (Aptma) said that one percent turnover tax has also pushed up the cost of production and there is no concept of such a tax in other three regional countries.
Besides, it said the aggregate corporate tax, including workers participation profit fund of five percent and workers welfare fund of two percent, turns out to be 40 percent. In Bangladesh, it is 27.5 percent and in India and China the same is 25 percent.
Pakistans textile exports peaked to $13.8 billion in 2010/11, but after falling to $12.4 billion in 2011/12 they regained momentum to touch $13.1 billion and $13.7 billion in 2012/13 and 2013/14, respectively. However, textile exports slipped to $13.5 billion in 2014/15.
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