Textile transit is at a standstill in Pakistan as freight forwarders and air cargo agents have shuttered indefinitely over a government imposed 8 percent minimum tax on turnover that they claim the industry can’t sustain.
The Pakistan International Freight Forwarders Association (PIFFA) and the Air Cargo Agents Association (ACAAP) sent a notice to the trade on Saturday alerting them of the closures, which took effect Monday.
And the associations aren’t planning on returning to business as usual until the government revokes the “undue” tax.
So what does this mean for brands doing business there?
For the duration of the strike, PIFFA and ACAAP companies will not:
- Perform sales activities
- Coordinate with shipping lines/airlines on behalf of customers
- Issue delivery orders, airway bills or bills of lading for full container load (FCL) or less than container load (LCL) cargo
- Send bookings to airlines/shipping lines
- Issue loading programs
- Provide or arrange transport
- Provide or issue containers
- Undertake customs clearance
On Monday alone, Pakistan reportedly lost roughly $130 million in export proceeds, Dawn reported ACAAP chairman Farrukh Iqbal as saying at a press conference in Karachi Tuesday.
“We are forced to take an extreme step as meetings with the Federal Board of Revenue’s chairman ended inconclusively,” Iqbal said.
According to Dawn, Finance Minister Ishaq Dar said in the past that the turnover tax would be withdrawn, but for now companies are paying the 8 percent, compared to the last fiscal year’s lower 1 percent rate.
“It is not exports alone which suffered. A huge quantity of perishable commodities and imports were stuck up because freight forwarders and air cargo agents did not issue delivery orders and bill ladings,” PIFFA chairman Asim Saeed told Dawn, adding that The Customs Freight Stations at all the air, sea and dry ports didn’t receive any cargo for shipments or import cargo for clearance, when in a typical day roughly 500 containers are processed and cleared.
PIFFA said in its emailed notice, “We apologize to the public in general and our customers in particular for any inconvenience,” noting that the association has tried to appeal to government agencies on the topic of the tax. “It is unfortunate government is not ready to listen to our grievance whereby forcing members companies to take extreme decision to close businesses.”