Pakistani Exporters to be Further Choked with the New Tax Regime

Pakistani exporters besides the political instability sparked off by several terror attacks across the country will have to survive another scare of a new bill which has been proposed to end the presumptive tax structure on its exports. Currently, under the presumptive tax regime the exporters have to pay just the bank deduction of one percent tax while realizations of foreign exchange on the total export merchandise.

The finance bill of 2009 tabled a proposal to amend sub-section (4) of Section 134 by substituting the tax deducted as a “minimum tax” which was hitherto deemed as a “final tax”. In short, if the bill is passed, the exporter will have to carry the burden of a new tax regime which would be based on commodity and its volume.

Apart from the amendment, in regards with exports to Afghanistan which is normally against cash, the proposed Bill has also introduced a new sub-section (3c) authorizes customs to collect tax at the time of clearance of goods exported at one percent of the gross amount of such goods.

The bill aims at streamlining the tax system especially by legislation that could bring all transactions under the tax net, and thereby to increase export tax revenue of the country. Hereafter, the exports without a letter of credit against a contract for which payment may be tendered through non-banking channels needed to be brought within the tax net.

Though there is no evaluation conducted on the pros and cons of the provision of “final tax” that has been in effect since 1992, exporters fear that in the present circumstances it would be hard to sustain in the market with any extra liabilities. Industry experts averred that taking into account the falling global demand for most goods any such move would only serve as a roadblock to export earnings of the country.

Toboc Trade News

Recession Impacted the UK Defence Exports despite Claims of No. 2 in 2008

In spite of claims of second place in the world on defense equipment export for 2008 and a 17 percent share of the global market, Britain’s defense exports fell marginally over the last five years’ average of 21 percent. According to the UK Trade & Investment’s Defence and Security Organisation (DSO), their firms have recorded exports valued at about $7bn for the last year.

It should be recalled the UK was the world’s largest defense exporter in 2007, accounting for a third of global defense exports. Britain was able to achieve the whopping figures of about $31bn worth of exports in 2007 particularly by the orders for Eurofighter Typhoon jets from Saudi Arabia. The jets are expected to be delivered to the Royal Saudi Air Force by this weekend.

DSO in its latest release said, as there was not any significant slide in defense demand as compared to previous years, the defense and security sectors are weathering the recession better than many other sectors. Nevertheless, Chris Baker, the DSO operations director acknowledged that 2009 wouldn’t be an easy year for the more resilient defense industry.

The DSO list show that the US retaining the highest rank followed by the UK and France in defense sales. However, according to another list issued by Stockholm International Peace Research Institute in April showed that while the US remained the world’s largest defense exporter, Russia, Germany and France came next in order followed by the UK at the fifth place.

The DSO authorities have admitted that their yardstick of assessment is based on deals signed in any one given year, while all other major players use actual deliveries to arrive at their figures. The DSO was formed last year after the Defence Export Sales Organisation was controversially moved by Prime Minister Gordon Brown from Ministry of Defence ownership to the Department for Business, Enterprise and Regulatory Reform.

Toboc Trade News