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VAT could push leather companies out of business

27/05/2010
The government of Pakistan is likely to apply a 15% rate of value added tax (VAT) on the leather industry in its federal budget for 2010-11 (July-June), which will be presented in parliament on June 05.

The Pakistan Tanners Association (PTA) and the Lahore Hide Market Association issued a statement urging the government to keep leather out of the scope of its new VAT policy. The two associations held a meeting to review the impact of VAT on leather at different stages of the supply chain. PTA (northern zone) chairman, Shaikh Muhammad
Naim, said that 15 per cent tax imposition would raise the working capital requirements to such an extent that it could push small and medium exporters out of business.
 
"The cost of doing business would increase by up to 70%, which would ruin the leather industry," he said.


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