The federal government has unveiled a fiscal year 2024-25 budget that exceeds 18 trillion rupees, which has raised concerns among industrialists and traders nationwide.
Jewellery exporters nationwide have strongly objected to the budget and are contemplating relocating their manufacturing bases outside Pakistan. Habib Rahman, chairman of the Pakistan Gem and Jewellery Traders Association, criticized the budget as harmful to the industry, particularly for exporters of gold jewellery.
Rahman emphasized the government’s failure to reinstate exemptions on an 18% sales tax and a 2% income tax previously allowed on the advance importation of gold for export purposes.
Further complicating the situation, Rahman highlighted the non-implementation of promised amendments in SRO-760, a regulatory order expected to facilitate export activities. Despite commitments from the Ministry of Commerce and the Federal Ministry of Finance to restore these tax exemptions and to amend the order, no changes have been made. The resulting regulatory stagnation has led to a drastic 95% decline in gold jewellery exports, plummeting from nearly $1.2 billion to just $50 million.
Rahman warned that gold exports could cease entirely without these critical amendments and the reinstatement of tax exemptions. Additionally, he expressed concerns about a proposed tax regime that could impose up to a 29% tax on exports, which would make continuing operations increasingly untenable. Given these unresolved issues in the budget, Rahman disclosed that many traders are now considering relocating their operations to locations like Sharjah and Dubai to maintain their viability in the global market.
