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The Pakistan Tanners Association has urged the government to include raw hides and skins in the 6th Schedule of Sales Tax Act, 1990 like Phutti (Raw Cotton).
The PTA central Chairman, Shaikh Saqib Masood stated that the leather sector is the second largest export earning industry of Pakistan with annual exports of $1.14 billion.
He claimed that the value added leather industry is restricted by anti-business policies of the government and the law & order situation in the country.
“There is need to review the sales tax regime particularly exclusion of hides & skins in the 6th Schedule of the Sales Tax Act, 1990 which badly hits the export-oriented leather sector.”
PTA, Chairman said that the leather products such as shoes, garments, bags, etc. are already subject to sales tax. As such, all local sales made from the production of hides and skins are liable to sales tax. Therefore, subjecting raw hides and skins to a sales tax will be further taxing the export industry and then creating refund issues which impede export business flow.
The Chairman of the PTA pointed out that the leather industry contributes billions of rupees to the national kitty regularly through payment of Customs Duty, Sales Tax, Income Tax, Withholding Tax, Export Development Surcharge (EDS), Tax on Services, EOBI, Social Security etc. During the past six years leather exporters paid $15.81 million towards EDS or approximately $2.63 million per annum.
He appealed to the government to consider PTA’s genuine demand and include Hides & Skins in the Sixth Schedule of the Sales Tax Act, 1990 so that exporters may be able to have an exemption from the tax and can play their role in propelling exports.