APTMA Proposes Tax Cuts, Reforms for Textile Sector Growth

The All Pakistan Textile Mills Association (APTMA) has put forward its budget proposals for FY2026–27, advocating tax relief measures, tariff rationalisation, and structural reforms aimed at enhancing export competitiveness.

APTMA has recommended the abolition of super tax, arguing that it adversely impacts the profitability of large taxpayers. It has also proposed reducing the minimum turnover tax from 1.25% to 0.5%, citing already compressed margins in the range of 1% to 2%.

The association further suggested a phased annual reduction of 1% in corporate income tax rates to bring Pakistan in line with regional competitors. It also called for the elimination of advance income tax, stating that quarterly payments create liquidity constraints for exporters.

Additionally, APTMA has urged the reinstatement of a fixed tax regime for exporters, noting that the cumulative burden of multiple taxes—including fixed export tax, corporate tax, advance tax, turnover tax, and super tax—negatively affects cash flow and competitiveness.

The proposals also highlight the need to rationalise or abolish various federal and provincial levies such as WWF, WPPF, and infrastructure cess, with the association noting that exporters currently face over 18 different taxes, collectively amounting to 7% to 11% of turnover.

On the sales tax front, APTMA has proposed a gradual reduction in the rate from 18% to 15%, along with the restoration of zero-rating across the textile value chain. It also recommended introducing a tiered tax structure with lower rates applied to raw materials and intermediate goods.

The association has called for the exclusion of man-made fibre yarns and fabrics from the Export Facilitation Scheme, citing a surge in imports—42 million kilograms during July–December 2025—and a corresponding decline in domestic production. It also proposed removing partially processed fabrics from the scheme.

Further recommendations include reducing duties on pure terephthalic acid to lower the cost of polyester production and eliminating anti-dumping duties on polyester staple fibre, which currently carry customs duties and additional levies on imports from multiple countries.

APTMA also proposed zero-rating customs duty on industrial spare parts and power plant equipment, while advocating the imposition of regulatory and anti-dumping duties on imported yarn and fabric to safeguard local industry.

The association noted that more than 40% of spinning and weaving units have ceased operations, while those still operational continue to face financial strain due to rising input costs and increasing competition from imports.