Trade association fiercely opposes allegedly oppressive new tax legislation, urgently demanding its immediate revocation
A Blast to the Textile Sector?
The textile industry in Pakistan has raised alarm bells about Tax Laws (Amendment) Ordinance, 2025, which was inaugurated on May 2, branding it as a "draconian measure" filled with "questionable additions."
In a bold move, the All Pakistan Textile Mills Association (APTMA) on Tuesday cried out to the government to retract these amendments and collaborate with industry players "to ensure that any tax reforms are just, open, and adhere to the rule of law."
Signed into existence over the weekend, this new legislation empowers the federal government to seize assets from taxpayers' bank accounts or other properties without prior warning, in the event of a court ruling. Moreover, it permits tax officials to inspect manufacturing sites, monitoring production, inventory, and unsold goods.
However, the APTMA, one of the country's key trade organizations, is worried that the amendments tacked onto Sections 138 and 140 of the Income Tax Ordinance dismantle taxpayers' legal protections under the law.
The statement reads, "This Orwellian setup grants the Federal Board of Revenue (FBR) powers that outshine even the High Courts and the Supreme Court of Pakistan. The revised provisions obliterate legal timelines and judgments, bestowing the FBR with unchecked power to enforce its demands ignoring any judicial aid."
The APTMA cautioned that the legislation "[expands] the FBR's discretionary powers, an organization often accused of high-handedness and relentless harassment of compliant taxpayers." It added that the ordinance jeopardizes the integrity of the judicial system and due process guaranteed by the constitution, further hindering the growth of legitimate businesses.
Meanwhile, APTMA hailed the Monetary Policy Committee's decision to cut the policy rate by 100 basis points, stating it would aid in reviving economic activity and alleviating the industrial sector's burden. However, the Association believed a more substantial decrease in the policy rate was warranted.
Based on past reactions from the business community, we can hypothesize the APTMA's apprehensions:
- Sudden Tax Recovery: The Ordinance allows for immediate tax recovery after a court decision, even if appeals are pending, which could significantly affect cash flow and operations for industries like textiles.
- Expanded FBR Powers: The FBR's amplified powers, such as the ability to deploy officials at business premises and recover taxes through attachment and sale of properties, may be seen as excessive and invasive, leading to concerns about privacy, operational disruptions, and potential misuse of authority.
- Legal Ambiguities: There could be concerns about legal uncertainties, especially regarding the refund process if cases are ruled in favor of taxpayers. Clarity on such procedures might be a sticking point for APTMA or similar organizations, as suggested by other business groups.
- Impact on Business Confidence: The measures introduced by the Ordinance might be perceived as harmful to business confidence. Physical deployment of tax officials could disrupt operations and create an atmosphere of distrust, which could negatively impact investment and growth in the textile sector.
- Collaboration with Stakeholders: APTMA might advocate for more consultation with industry players before implementing such sweeping legislative changes, aligning with the broader business community's call for dialogue and careful consideration of business impacts.
- The All Pakistan Textile Mills Association (APTMA) is concerned that the Tax Laws (Amendment) Ordinance, 2025, due to its sudden tax recovery provisions, could significantly impact cash flow and operations within the textile industry.
- Aware of the federal government's authority to seize assets from taxpayers' bank accounts or properties without prior warning, the APTMA is apprehensive about the Ordinance's potential privacy invasions and operational disruptions by expanded FBR powers.
- The APTMA questions the legal ambiguities of the Ordinance, particularly regarding the refund process in favor of taxpayers, and it might seek clarity on such procedures to ensure fairness and integrity.
- The Association believes that the Ordinance's measures might undermine business confidence within the textile sector, creating a distrustful atmosphere that may hinder investment and growth in the industry.
- In an effort to maintain the rule of law and ensure just tax reforms, the APTMA calls for increased collaboration with the government and industry players to understand the impact on various aspects of the textile business before implementing such sweeping legislative changes.
- While welcoming the Monetary Policy Committee's decision to cut the policy rate, the APTMA believes a more substantial decrease would aid in reviving economic activity and alleviating the industrial sector's burden, particularly the textile sector,which is under threat from questionable policy-and-legislation and politics-related issues.
