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Pakistan Tanners Association has asked the government to include raw hides and skins in the sixth schedule of Sales Tax Act, 1990 like other raw materials such as Phutti (raw cotton) to fulfill the domestic needs of the leather sector, which is the second largest exporting sector of Pakistan.
PTA Chairman, Saqib Saeed Masood said if this happens, leather product exporters would be exempt from the sales tax and could play their vital role in propelling exports. The leather industry earns the country the annual export revenue of $1.14 billion. It provides jobs to one million people and is the mother industry of the leather garment, footwear, glove and other leather goods industries, he said. Masood said Pakistan produces one of the world’s finest quality leather products. He said if the government provides level-playing field, the leather industry could reach exports worth three billion dollars in the next three years. The tanners chief said the industry contributes billions of rupees towards national exchequer through customs duty, sales tax, income tax, withholding tax, EDS, tax on services, employees’ old age benefits and social security etc.
During the past six years, the leather exporters paid $15.81 million in EDS i.e. approximately $2.63 million per annum.
Masood said leather products such as shoes, garments, bags, etc. are already subject to sales tax. PTA former chairman Agha Saiddain said the local supply and import of hides/skins under has always remained exempted from duties and taxes. He said that the hides/skins are purchased from small butchers from all over the country and on Eid-e-Qurban from persons carrying 4/5 skins on bicycles. For this reason hides/skins were never made taxable even in competing countries such as India, China, Vietnam, Cambodia, Malaysia, Indonesia, Taiwan etc. It would be unique example if hides/skins are made taxable even from unregistered persons, he added
Duties and taxes will make the leather industry of Pakistan less competitive. To allow level playing field the authorities should adopt the same policy in the country.