PRGMEA Opposes Sales Tax on Exporters

The Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has expressed its opposition to the potential imposition of an 18 percent sales tax on exporters under the Export Facilitation Scheme (EFS). The association cautioned that such unfavorable measures could cripple the garment export sector, restrict cash flow, and hinder Pakistan’s prospects of securing a substantial portion of the global apparel market.

Concerns Over Proposed Tax Burden

In response to proposals suggesting a significant tax burden on exporters, PRGMEA voiced strong concern, characterizing it as a calculated effort by certain groups within the domestic textile industry to undermine the growth potential of the ready-made garments (RMG) sector, a dynamic and value-added industry. The association urged the immediate dismissal of such proposals and insisted that the EFS remain fully operational to facilitate exporters’ access to tax-free inputs in a timely and efficient manner.

EFS as a Necessity

Dr. Ayyazuddin, the Regional Chairman of PRGMEA, emphasized that the EFS is essential for export-driven growth, not a mere convenience. He noted that the garments industry, being entirely export-focused and positioned at the end of the textile value chain, is particularly vulnerable to delayed refunds and multiple taxes. Exporters are already burdened with upfront sales tax payments, often enduring a three-month delay in receiving refunds, which severely affects their cash flow and operational capabilities. The imposition of supplementary taxes would exacerbate this challenging scenario.