Pakistan's yarn sector seeks tax relief, energy reforms to boost competitiveness

The Pakistan Textile Exporters Association (PTEA) has urged the government to introduce policy reforms to support yarn exporters, including rationalizing advance tax, restoring the Final Tax Regime, and removing excessive protection for local polyester fiber manufacturers. These proposals are part of the association’s recommendations for the 2025-26 budget under review by the Finance Ministry and the Federal Board of Revenue (FBR).

PTEA highlighted the disparity in taxation, noting that yarn traders pay a lower advance tax rate of 0.5 per cent compared to 1 per cent on textile goods and 2 per cent for exporters under Sections 153 and 147. The association has called for reducing advance tax on export proceeds to ease financial pressure and improve competitiveness.

It also demanded the removal of protective duties on polyester fiber imports, aligning them with regional competitors like China, Vietnam, and Turkey to help boost synthetic yarn and fabric exports.

Additionally, PTEA has stressed the need for a five-year freeze on energy tariffs and a structured refund system to ensure timely disbursement of sales tax and duty drawback claims. The association maintains that these measures are essential to sustaining Pakistan’s yarn exports and strengthening its position in the global textile market.