Pakistan raises GST / Sales Tax on exports

Wed 4th Jun 2014

The antiquated Pakistani Goods & Services Tax (GST) regime has drawn fresh criticism with plans to hike the GST / Sales Tax rate on exports from 2% to 5%.

Pakistan’s GST regime is due for reform, with the implementation of a full Value Added Tax regime based on OECD recommendations being planned. However, in the meantime, manufactures are having to struggle with a tax system prone to double taxation and delayed refunds.

A range of export industries are also liable to GST at 2%. It is unusual for consumption taxes to be levied on exports since the final consumers are outside of the country. In Pakistan, textiles manufactures are liable to the charge, as well as non-taxable persons sending goods abroad – often at 1%.