Textile exporters raise tax disparity, refund delays in meeting with finance minister

Leading textile and clothing exporters have raised concerns over the current tax and regulatory framework, saying it places export-oriented businesses at a disadvantage compared with domestic firms. The issue was discussed during a meeting with Finance Minister Muhammad Aurangzeb, where exporters said the existing system requires them to pay a two percent advance tax on every transaction, while domestic businesses settle tax liabilities on a quarterly basis.

Exporters said the system also ties up a significant portion of their capital in pending refund claims, creating liquidity constraints for companies operating in international markets.

Industry representatives told the finance minister that despite remaining compliant with tax requirements, the sector continues to face high operating costs and regulatory challenges.

They urged the government to simplify the tax framework, ensure equal treatment for export-oriented and domestic businesses, and address delays in refund processing.

During the meeting, exporters informed the government that value-added textile exports are projected to reach about $15.6 billion in fiscal year 2025–26. They said the value-added segment is expected to account for 80% to 85% of total textile exports and around 51% of Pakistan’s overall exports.

The finance minister acknowledged the concerns raised by exporters and said the government would examine possible reforms within available fiscal space.

Both sides agreed to continue consultations after the Eid holidays to discuss potential policy adjustments.

Officials said strengthening export-oriented sectors remains a key part of Pakistan’s economic strategy.

Aurangzeb said improving productivity, encouraging innovation and increasing global competitiveness of key industries are important for expanding exports and supporting employment and economic growth.

He added that the government would continue engagement with industry stakeholders while refining policy frameworks to promote investment, remove procedural bottlenecks and maintain macroeconomic stability.