According to a letter of concern from the Pakistan Business Council (PBC) to the Finance Minister, the government is considering charging manufacturing companies a minimum annual revenue of Rs 50 million and an additional 5 percent income tax.
Sources claimed that the government was considering slapping 1% to 5% special income tax on manufacturers with an annual income of Rs50 million and more, and they exported less than 10% of their production.
Pakistan’s GDP is heavily reliant on its manufacturing industry. It contributes 56% of the country’s tax receipts. Pakistan’s economy has suffered deindustrializing over the past couple of years.
Finance Minister Miftah Ismail urged every company to export 10% of its goods to earn foreign currency, while assuring them that the government would make shipping easier.
The manufacturing sector is already heavily taxed, paying three times its share of the entire economy’s size. The purpose of the special income tax is to collect money to compensate the government for the losses incurred to appease the privileged section of the population.
During the current fiscal year, imports decreased by 14% to $8.5 billion as of August 16. Non-energy imports decreased by nearly one-fifth to $6.3 billion compared to last fiscal year.
Furthermore, meetings will take place for the final decision on imposing additional income tax on the manufacturing industry. However, the decision might hurt the industrial sector.