By SKM
May 04, 2026
ISLAMABAD: Warning of mounting closures and shrinking competitiveness, the All Pakistan Textile Mills Association (APTMA) has called for sweeping tax cuts and structural reforms in its proposals for the upcoming FY2026–27 federal budget.
In a detailed submission, the association urged the government to abolish the super tax, slash the minimum turnover tax from 1.25% to 0.5%, and gradually reduce corporate tax rates to align with regional competitors. It also sought the elimination of advance income tax, arguing that quarterly payments are straining liquidity in an industry already operating on razor-thin margins.
APTMA stressed that exporters are currently burdened by multiple layers of taxation, including fixed export tax, corporate income tax, advance tax, and additional levies, which collectively erode profitability and undermine global competitiveness.
Calling the existing tax regime “unsustainable,” the association proposed restoring a fixed tax system for exporters and rationalising more than a dozen federal and provincial levies that, it said, have little direct connection to export activity.
On the sales tax front, APTMA recommended a phased reduction from 18% to 15% and the reintroduction of zero-rating across the textile value chain. It argued that the current multi-stage taxation system disrupts cash flow and is exacerbated by delays in refund payments. The association also suggested adopting a tiered tax model similar to India, with lower rates on raw materials and intermediate goods.
Raising concerns over rising imports, APTMA called for the exclusion of man-made fibre (MMF) yarns and fabrics from the Export Facilitation Scheme (EFS), claiming that duty-free imports are hurting domestic production. It further urged the imposition of regulatory and anti-dumping duties on imported yarn and fabric to protect local industry.
At the same time, the association proposed reducing tariffs on key raw materials such as Pure Terephthalic Acid (PTA) and removing anti-dumping duties on polyester staple fibre (PSF) to support the development of Pakistan’s synthetic textile segment.
Highlighting the gravity of the situation, APTMA warned that over 40% of spinning and weaving units have already shut down, with many of the remaining mills operating under severe financial stress due to high input costs and increasing competition from cheaper imports.
The proposals set the stage for a challenging policy balancing act, as the government weighs industry demands for relief against the need to maintain fiscal stability in the upcoming budget.
