Govt to Slap 18% Sales Tax on Exporters

Exporters will face 18% sales tax on imported raw materials in the upcoming budget, aligning them with local raw materials already taxed at the same rate since last year, according to the Federal Board of Revenue (FBR). The tax move comes alongside an IMF-backed policy forcing exporters to pay both 1 percent minimum income tax on gross receipts and 29 percent standard income tax, reported Express Tribune. The IMF has now directed Pakistan to retain the 1 percent minimum tax for at least two to three more years due to uncertainty over revenues from the standard regime. FBR Member Tax Policy Dr. Najeeb Memon confirmed this during a meeting of the National Assembly Standing Committee on Finance. It was disclosed that this 1 percent minimum tax is non-refundable and payable in addition to the 29 percent standard tax. The committee also discussed the imposition of an 18 percent sales tax on local raw materials for exports introduced in the last budget. Committee Chairman Syed Naveed Qamar criticized the FBR’s passive tax collection practices. He deferred approval of the Income Tax Second Amendment Bill, which proposes restoring a 25 percent tax credit for full-time teachers and researchers from July 1, 2022, through tax year 2025. Medical professionals engaged in private practice are excluded from this relief.