The National Board of Revenue has issued two separate notifications extending the effectiveness of the reduced corporate income tax rates for the readymade garment sector by one year and for the textile sector by three years. According to a statutory regulatory order issued recently, export-oriented apparel makers both from woven and knitwear sectors will continue to enjoy corporate tax rate at reduced 12 per cent up to the next fiscal year of 2019-2020.

The tax rate, however, for entrepreneurs having internationally recognised green building certification for their factories, will be 10 per cent while the tax rate for the other companies will be 12 per cent.

The NBR, in another SRO issued recently, said that textile sector would enjoy corporate income tax rate at 15 per cent for another three years up to July, 2022.

Entrepreneurs who are involved in yarn production, dyeing, finishing, coning, fabrics production, fabrics dyeing, finishing, printing and other similar activities will enjoy the benefit. Generally, corporate tax rate in the country is 25 per cent for publicly listed companies and 35 per cent for non-listed companies.

The textile sector has been enjoying the reduced tax rate since 2015. The NBR tried to increase the tax for the RMG sector to 15 per cent in FY18 but failed due to strong lobbying from the businesses in the sector. In the proposed budget for FY20, the NBR has also reinstated source tax on export earnings by apparel makers to 1 per cent as the tenure of reduced rate at 0.25 per cent is set to expire on June 30.