Pakistan’s FBR imposes 5% sales tax on cotton import

Pakistan’s Federal Board of Revenue (FBR) recently withdrew sales tax zero-rating facility on the import of raw and ginned cotton and imposed 5 per cent sales tax on this item at import stage, according to Pakistani media reports. 

The government had withdrawn sales tax and customs duty on cotton imports beginning January 8 to meet the shortfall of silver fibre. Silver fibre is a key input in the textile industry.

Despite being the world’s fourth largest cotton producer, Pakistan relies on import of cotton to meet local demand, which is estimated at 15 to 16 million tons per year.

Cotton production is expected to be around 11.1 million bales of 170 kg each during the 2017-18 crop year.