The Pakistan Fruit and Vegetable Exporters Association (PFVA) has strongly opposed the Federal Government’s proposal to impose a 29% tax on export earnings in the next financial year’s budget 2024-25. The association warns that replacing the current 1% fixed tax regime with the proposed tax will severely impact Pakistan’s economy.
Patron-in-Chief of PFVA, Waheed Ahmed, addressed the media at an emergency press conference, emphasizing that the proposed tax would drastically reduce exports, lead to the closure of export units, increase unemployment, fail to meet tax revenue targets, and cause a shortage of foreign exchange, further devaluing the rupee. He highlighted the critical role of the agricultural sector in Pakistan’s economy, noting that millions of agricultural professionals’ livelihoods would be at risk. Ahmed pointed out that due to the PFVA’s efforts, fruit and vegetable exports from Pakistan have reached $700 million, with aspirations to increase this to $1 billion and eventually $3 billion in the next five years.
He stressed that climate change and rising costs pose significant challenges to the agriculture and horticulture sectors, making it difficult to compete internationally. Despite this, the government has failed to provide the expected relief package for the agriculture sector in the budget, ignoring its critical needs. The PFVA is dedicated to exploring new international markets, improving packaging and processing, and enhancing the quality of fruits and vegetables. However, the proposed 29% tax would shift the focus of exporters away from their primary goal, as they would need to spend more time managing financial records.
Ahmed explained that implementing the 29% tax would make it challenging to maintain current export levels, causing a decline in exports within the same year due to the resulting uncertainty. He outlined several issues, including the tax exemption for the agricultural sector and the prevalence of cash-based transactions. Most Pakistani farmers are small-scale and either tax-exempt or zero-rated, making it impossible to establish a clear money trail of expenditure. He noted that under the fixed tax regime, exporters already contribute 0.25% as Export Development Fund (EDF) and 1% withholding tax, alongside 0.25 to 0.35% bank charges, totaling 1.85% of their turnover. The PFVA has consistently opposed the abolition of the 1% fixed tax and the imposition of the 29% tax, arguing that it would lead to harassment from tax authorities, corruption.
